It failed to surprise any traders when prices fell at all but one point Friday. Despite cooling trends in the Midwest and South, moderation dominated the general weather outlook; the latest storage withdrawal report reinforced the perception of plentiful inventories (especially when the Producing region had an unusually early net injection); prompt-month futures had fallen 4 cents on the previous day; and the decline of industrial load during a weekend was a minor bearish factor as usual.
Trends
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Northeast Plunges Again Lead Dips Across Board
As could be expected, weekend warming trends in many parts of the U.S. and Canada combined with a forecast of above-normal temperatures in most of the eastern two-thirds of the U.S. this week to keep prices falling at all points Friday. The previous day’s March futures drop of nearly 6 cents in the face of a nominally bullish storage report and the usual weekend decline of industrial load put further downward pressure on the cash market.
Industry Briefs
Energen Resources Corp. has purchased three-year leases for about 17,000 net acres in the Bone Spring and Avalon shale trends in the Permian Basin from various Texas state agencies and other entities for $15.3 million, said parent Energen Corp. Based on 320-acre spacing, the company estimates that the acreage in Reeves, Ward, Loving and Winkler counties offers potential for approximately 50 Bone Spring locations and 50 Avalon Shale locations. The typical Bone Spring well has estimated ultimate recovery of 400,000-500,000 boe, the company said. Energen Resources estimates that drilling and completion costs are approximately $7.5 million per well. It has drilled eight Bone Spring wells in Ward and Winkler counties and participated in another 23 wells. The company announced plans in December to drill another 13 Bone Spring net wells in 2011 and at least one Avalon Shale well. Potential drilling plans on the new leases in 2011 have not been determined.
North America’s Unconventional Resources An Investment Draw
Major joint ventures (JV) in North American unconventional resource plays were a driving force in pushing worldwide merger and acquisition (M&A) activity to a record high in 2010, preliminary data indicate.
Mixed Market Dominated by Higher Quotes
The cash market largely shrugged off a prior-day drops of 3 cents by futures and some continuing trends toward milder weather in rising at a modest majority of points Wednesday.
Most Points a Bit Higher as Mixed Pricing Prevails
The brief midweek firming effect on gas prices from colder weather began to fade a bit Thursday as modest warming trends were in effect in such areas as the South, Northeast and Midwest. They weren’t substantial enough to generate much in the way of cooling load, but they caused the market to be mixed on small price changes both up and down from flat.
Market Sees Firmer Quotes at Most Locations
Perhaps due to a little heating load starting to appear in some northern and western market areas, along with moderate warming trends returning in the South, the market found enough weather-based support to see modest gains at a small majority of points Tuesday.
Bit of Extra Heat, Screen Send Most Points Higher
With some support from the previous day’s 9.7-cent rebound by October futures, warming trends in parts of the key Midwest and Northeast market areas propelled cash prices higher at a large majority of points Wednesday.
Futures, Heat Levels Boost Entire Cash Market
As expected, a strong rebound by July futures a day earlier and still-robust cooling load — despite some moderating weather trends from earlier in the week — pushed cash prices higher across the board Thursday.
Market Modestly Softer at Most Locations
A week of firmness in most of the cash market came to an end Wednesday as slight cooling trends in some areas combined with a prior-day screen loss of 9.3 cents to push prices lower at a large majority of points.