Rebound

Despite recent sharp declines in Canadian production and exports to the United States, a new analysis by the Canadian Energy Research Institute (CERI) concludes that as long as gas supply from unconventional sources, such as coalbed methane and new basins, can be brought on stream in a timely manner, gas production in Canada can be sustained at levels higher than currently exist through at least 2025.

Prices relied on Monday’s return of industrial load after the weekend and perceptions of hotter weather later this week in some locations to realize mostly moderate rebounds from Friday’s plunges. Eastern points tended to range from down a few pennies to 20 cents higher. The West recorded similar movement at some points but also saw even larger gains close to half a dollar at the Southern California border and PG&E citygate and around 30 cents or so in the San Juan Basin.

It was not a very stellar week for Nymex natural gas bulls. After notching a new, three-month high and closing the previous week in fine form, natural gas futures entered last week poised to move higher. As it turns out, however, looks can be deceiving and the July contract was hit with a wave of negative price factors last week.

After dropping to a new two-week low on the heels of another in a string of bearish storage figures (95 Bcf injection), the natural gas futures market rebounded vigorously Thursday as traders continued to take a bullish view on the technical outlook. On its first day as prompt contract at Nymex, July futures finished 5 cents higher $6.066.

The June natural gas futures contract was able to shrug off its second straight negative open Wednesday as buyers entered the fray when it became apparent the market wasn’t going to fill in a key chart gap from late April. The June contract finished at $5.660, up 9.2 cents for the session and 20 cents above its morning low. Gains were even larger in the July contract, which rumbled 10.2 cents higher to $5.735.

Energy trading is going through a natural shakeout period and will rebound once the process is completed, an industry think tank has concluded.

Energy trading is going through a natural shakeout period and will rebound once the process is completed, an industry think tank has concluded.

Buoyed by crude oil and by falling mercury readings in the Northeast, natural gas futures rebounded sharply Tuesday morning as fund traders added to their long positions. However, the day’s advance was tempered slightly when afternoon as light selling entered the fray and deposited the prompt contract back below the psychologically important $6.00 mark. By virtue of its 12.5-cent advance and $5.977 close, the March contract remains in bulls hands. At 99,244 estimated volume was heavy and served to punctuate the price advance.

Despite expectations of continued softness following Tuesday’s all-around price plunges, most points found themselves in rally mode Wednesday. With a few scattered small drops thrown into the mix, the majority of the cash market ranged from flat to up nearly 40 cents, with gains in the teens being most common. Tennessee Zone 6 was a standout with an uptick of more than 80 cents.