Poised

Natural gas wellhead deliverability is weaker than many observers realize, and the natural gas futures strip is undervalued, according to Kevin Petak, director at Arlington, VA-based consulting firm Energy and Environmental Analysis Inc. (EEA). Petak believes $5 Henry Hub gas prices will arrive very soon — most likely in January or February — and prices should average $5.35 next year.

Natural gas wellhead deliverability is weaker than many observers realize and the natural gas futures strip is undervalued, according to Kevin Petak, director at Arlington, VA-based consulting firm Energy and Environmental Analysis Inc. (EEA).

After pressuring prices lower ahead of the weekend, natural gas futures traders bid the market back up Monday in reaction to forecasts calling for Isidore to re-strengthen as it moves off the Yucatan Peninsula into the warm waters of the Bay of Campeche. Buying was seen in two distinct surges. Prices bubbled steadily higher throughout the morning and then spiked at the closing bell. The October contract finished at $3.978, 22 cents higher for the day and just off its new 15-month top at $3.99. The November contract, which will become the prompt contract after October goes off the board Thursday at 2:30 p.m. EDT, finished 18.3 cents stronger at $4.175.

Tropical Depression Ten was churning south of Jamaica Tuesday evening and was poised to become a Tropical Storm in the next 24 hours, according to the National Hurricane Center. The storm contributed to a sharp rise in futures prices Tuesday — the October contract soared to a high of $3.69 — but failed to produce much of an effect on cash prices until very late trading. Most cash points were flat to up or down a few cents on average.

El Nino once again is poised to put a damper on winter gas demand across the United States, the National Oceanic and Atmospheric Administration (NOAA) indicated in an update. NOAA said the El Nino influence will be weaker than the very strong 1997-98 version, but will still impact temperature and precipitation patterns. Above normal temperatures are expected across the northern tier of the nation from October through March. NOAA showed no probabilities of below normal temperatures anywhere in the country.

El Nino once again is poised to put a damper on winter gas demand across the United States, the National Oceanic and Atmospheric Administration (NOAA) indicated in an update. NOAA said the El Nino influence will be weaker than the very strong 1997-98 version, but will still impact temperature and precipitation patterns. Above normal temperatures are expected across the northern tier of the nation from October through March. NOAA showed no probabilities of below normal temperatures anywhere in the country.

Following the stinging defeat last week of the controversial proposal to open the Arctic National Wildlife Refuge (ANWR) to oil and natural gas drilling, the Senate leadership signaled that it expects to wrap up and vote on the omnibus energy bill this week (S. 517).

Mexico’s energy industry will face big challenges in the next 10 years, as demand for natural gas rises an estimated 120% — with 55% of that demand tied to a huge increase in gas-fired generation. Now positioning itself to become one of the “frontiers” for gas development, a top Mexican energy official said Tuesday that the country has begun courting more private investment to improve its aging pipeline and transmission infrastructure, add at least two liquefied natural gas (LNG) plants and begin intensive exploration and development efforts of its prolific and untapped reserves.

The worldwide liquefied natural gas (LNG) business is in a state of rapid growth and flux, and the U.S. marketplace is guiding it, according to Gabriel Avgerinos, general manager of LNG and gas consulting at Poten & Partners in New York. Speaking on a panel at GasMart/Power in Reno, Avgerinos predicted that a massive expansion of LNG trade and imports will take place over the next decade as long as U.S. gas prices remain above $2.50/MMBtu.