Unimpressed

Natural gas futures dropped a second consecutive day on Wednesday but some veteran market watchers remained unimpressed, noting that they believe the near-term bottom to the market at $3.810 was recorded last Thursday.

Natural gas futures dropped a second consecutive day on Wednesday but some veteran market watchers remained unimpressed, noting that they believe the near-term bottom to the market at $3.810 was recorded last Thursday.

Natural gas futures traders were unimpressed by Thursday morning’s report that a healthy 79 Bcf was injected into underground storage for the week ended Oct. 10. While the number was larger than historical figures, it was mostly inline with expectations, which allowed futures bulls to continue to push the November contract higher. The contract reached a high of $6.842 before closing at $6.703, up 11.1 cents from Wednesday’s close.

Unimpressed by the paths of the first two significant storms of the season, natural gas futures on Tuesday lacked the ability to rebound from Monday’s 29.9-cent drop. The prompt month settled up three-tenths of a penny at $5.816 after trading within a $5.77-5.855 range on the day.

Apparently unimpressed with the larger than expected storage withdrawal announced Thursday, the April natural gas futures contract dropped 9.3 cents on the day to close at $5.336. The consensus among market observers was that the 65 Bcf pull from storage surprised no one after the East experienced a widespread cold snap last week.

Even with a change of administration in California and new energy plans that emphasize locally based energy supplies, one of the state’s more vocal independent oil/gas producers is skeptical that adequate incentives will be developed to unlock trillions of cubic feet of natural gas still lying under the state’s fossil-fuel rich central valley.

Even with a change of administration in California and new energy plans that emphasize locally based energy supplies, one of the state’s more vocal independent oil/gas producers is skeptical that adequate incentives will be developed to unlock trillions of cubic feet of natural gas still lying under the state’s fossil-fuel rich central valley.

Despite a third straight triple-digit weekly storage injection (114 Bcf), natural gas futures surged Thursday in three distinct waves of short-covering and speculative buying. When the dust had settled and the orders counted at Nymex, the numbers were impressive: July natural gas futures rose 36 cents to close at $5.941, just off its new one-week high of $5.95. In contrast to the first three trading days of this week, volume at Nymex was heavy Thursday, with an estimated 92,607 contracts changing hands.

Clearly unimpressed with NRG Energy’s efforts so far to unload more than 12,000 MW in power assets that it desperately needs to sell in order to shore up its finances, Moody’s Investors Service last Thursday lowered the debt ratings on the Minneapolis-based subsidiary of Xcel Energy. Fearing that Xcel Energy will get burned by the large amount of investments it has made in NRG Energy, Moody’s also lowered the debt ratings on Xcel Energy.