Realization

Front-month natural gas futures spent their second consecutive day below $4 as traders continued to come to the realization that the United States might be working its way into an oversupplied situation. One day ahead of expiration, the April contract reached a low of $3.863 on Friday before closing at $3.872, down 10.9 cents from Thursday’s close and 29.7 cents lower than the previous week’s finish.

At first it looked as though November futures were going to settle above the psychologically important $5 level, but the realization that the primary near-term market driver — forecasts of colder-than-normal weather — had been fully discounted was enough to pull the plug on prices.

With the realization that natural gas storage levels are likely to be at record or near-record levels this summer, natural gas futures on Friday finally broke through long-standing support in the $6.450 to $6.500 area while putting in a new low for the greater down move. June natural gas recorded a low of $6.225 before closing out the week at $6.280, down 36.9 cents on the day and 49.5 cents lower for the week.

FERC last Wednesday took a major step towards the realization of an Alaskan natural gas pipeline by issuing a final rule that lays out all the steps that potential sponsors will have to follow when allocating transportation capacity on a long-line system stretching from Alaska’s North Slope to markets in the Lower 48 states.

For the first time in the last eight quarters, Chesapeake EnergyCorp. of Oklahoma City, OK, turned a profit. The improvement was inspite of decreased production.