Even though the 259 Bcf storage withdrawal last week failed to match the all-time record weekly withdrawal by a mere 1 Bcf, March natural gas futures failed to rally Thursday after the EIA storage report. Instead, the prompt-month traded in a $7.050 to $7.300 range before settling at $7.292, up 5.1 cents from Wednesday.
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NGI The Weekly Gas Market Report
Chesapeake Hedges 71% of 2006 Gas at $9.43/MMBtu
When you can lock in nearly three-quarters of your production at $9.43/MMBtu, that’s a pretty good deal, particularly when a mere three years ago you hedged 39% of your production at an average of $4.33/Mcf. Chesapeake Energy Corp. over the past month increased its hedge position, locking in an average Nymex price of $9.49/MMBtu for 721 Bcf of natural gas production over the next three years.
June Futures Make Big Noise With Small Price Change
The June Nymex contract may have only slipped a mere 1.9 centsto $2.202 on Friday, but that small price change may loom verylarge indeed. By virtue of not settling above $2.22, “we’ve takenout and settled below the up trendline, establishing at least ashort term downtrend, if not a sideways trading range,” said TomSaal, Vice-President of Pioneer Futures in Miami. “I think themarket rode up to $2.70 because of speculative buying, and also onthe expectations of a hotter summer. Well, we haven’t met thoseexpectations yet, and now the market has tumbled back down,” hesaid.
Futures Bend But Refuse to Break
The May futures contract suffered a third straight day of lossesby slipping a mere 0.6-cents to settle at $2.469 in relativelyquiet trading. The session was marked by light selling as bearsprobed for sell-stops but was kept in check by buying ahead of the2.435-.440 level. A modest 31,695 contracts changed hands in asession that saw no new fundamental developments.