Plummeting

With October futures plummeting to a daily low of $4.07 on expiration day Wednesday while December futures remained just over $7, Oklahoma City-based Chesapeake Energy decided it was a pretty good time to announce the shut-in of 125-150 MMcf/d (gross), which represents the bulk of the third largest independent producer’s remaining unhedged production.

With gas prices plummeting over the last two weeks and storage space severely limited, it may not be long before producers start curtailing production. Analysts at Raymond James & Associates said last week if recent higher-than-average storage injections continue, “then U.S. producers would need to shut in about 10% of their production to rebalance the system over the next two months.”

In response to plummeting natural gas futures prices, the New York Mercantile Exchange Inc. (Nymex) on Thursday announced some margin reductions for its natural gas futures, Henry Hub swap futures, Henry Hub penultimate swap futures, and Nymex miNY natural gas futures contracts at the close of business Friday.

With natural gas futures prices plummeting over the past few weeks, the New York Mercantile Exchange Inc. (Nymex) last week announced margin decreases for its natural gas futures, Henry Hub swap futures, Henry Hub penultimate swap futures, Nymex miNY natural gas futures and Henry Hub swing swap futures contracts. The changes went into effect at the close of business last Wednesday.

With winter weather conditions still in mostly hibernation for a large swath of the United States, and natural gas prices plummeting as a result, the question within the energy industry remains how long can the unseasonably warm conditions last? Unfortunately, the answer is: it depends on whom you ask.

With natural gas futures prices plummeting over the past week, the New York Mercantile Exchange, Inc. (Nymex) said Wednesday that it was decreasing the margins for natural gas futures, Henry Hub swap futures, Henry Hub penultimate swap futures, Nymex miNYTM natural gas futures, and natural gas swing swap futures contracts at the close of business on Friday.

After plummeting to trade at $5.32 just prior to noon (EDT), September natural gas futures failed to find any traction and failed to bounce off the floor for the remainder of the trading session. The prompt month reached a low of $5.305 in afternoon trading before settling at $5.31, down 24.2 cents from Friday’s close.

Buoyed by plummeting mercury levels in the eastern half of the country, the natural gas futures market continued on its meteoric rise Tuesday as speculative traders headed for the exits. However, in contrast to Monday’s session, the price action Tuesday was anything but straight-line, with the market having to work its way back from a midday sell-off.

Outside of Rockies numbers plummeting by 40 cents or more, and a smaller San Juan-Blanco loss of a little more than 20 cents, the cash market held up more strongly Friday than some traders had expected. Non-Rockies/San Juan quotes ranged from flat to up nearly a dime, with gains of less than a nickel most common.