Largely

With mother nature largely in control of the natural gas market, forecasting prices can be a real headache. Winter Henry Hub prices (November-March), for example, could average anywhere from $4 to $11.50, depending on whether temperatures are 13% warmer than normal or 12% colder than normal this winter, Energy and Environmental Analysis Inc. (EEA) said in its latest Monthly Gas Update. EEA’s best guess is an $8.48 winter average at the hub.

Prices softened averted across the board in Thursday’s cash market. Negative influences were largely unchanged: widespread moderate weather, futures weakness, nearly full storage and the lack of a hurricane threat to offshore production with the end of the peak period (August-September) in Atlantic hurricane seasons rapidly approaching.

“The industry’s acreage land grab of the last five years is largely over. Virtually every conventional and unconventional gas resource play in the U.S. is totally locked up. The winners for the next 10 to 20 years have already been chosen and the losers will pay the price for years to come for being left behind.”

“The industry’s acreage land grab of the last five years is largely over. Virtually every conventional and unconventional gas resource play in the U.S. is totally locked up. The winners for the next 10 to 20 years have already been chosen and the losers will pay the price for years to come for being left behind.”

Basing its strength largely on Monday’s 14-cent near-month futures gain, and to a lesser degree on the South adding some air conditioning load to that already existing in the scorching desert Southwest, the cash market recorded double-digit increases across the board Tuesday. Opinions were divided on whether the rally could be sustained Wednesday.

The trend toward higher natural gas prices in recent years has largely been due to market forces and weather disruptions, namely Hurricanes Ivan, Katrina and Rita in 2004 and 2005, an official with the Governmental Accountability Office (GAO) told a Senate panel that is investigating price volatility in the natural gas market.

The February aftermarket got off to a strong beginning Tuesday with advances across the board. They were spurred largely by the screen’s huge run-up of nearly 90 cents the day before and to a lesser degree by modest growth in heating load.

Domestic production of dry natural gas fell 1% to 19.17 Tcf in 2004 due largely to the damage to infrastructure caused by Hurricane Ivan in the fourth quarter and the drop in new gas field discoveries, according to the Energy Information Administration ‘s (EIA) annual report on U.S. oil and natural gas reserves.

Spot prices rose anywhere from a dime to a dollar on Monday largely in response to a cold front that is expected to drop eastern temperatures to below-normal levels from Chicago to Florida starting Tuesday and continuing through Thanksgiving.