Upward

If Mexico’s natural gas production continues to inch upward, it may play a “modestly bearish” role in the U.S. gas equation in 2008, according to energy analysts with Raymond James & Associates Inc.

If Mexico’s natural gas production continues to inch upward, it may play a “modestly bearish” role in the U.S. gas equation in 2008, according to energy analysts with Raymond James & Associates Inc.

Concerns about extreme weather conditions and rising prices in the crude oil market will keep upward pressure on the Henry Hub natural gas spot price this year and next, the Energy Information Administration (EIA) said in its Short-Term Energy Outlook for April and Summer Fuels Outlook. It also anticipates higher gas consumption and production levels this year.

Concerns about extreme weather conditions and rising prices in the crude oil market will keep upward pressure on the Henry Hub natural gas spot price this year and next, the Energy Information Administration (EIA) said in its Short-Term Energy Outlook for April and Summer Fuels Outlook. It also anticipates higher gas consumption and production levels this year.

The upward enthusiasm of Tuesday quickly dissipated Wednesday as traders reverted to tried and true seasonal spread trading. April futures fell 10.6 cents to $7.366 and May eased 9.7 cents to $7.491 as funds and managed accounts bought May contracts and at the same time sold April and also bought January and sold October.

Oil/gas production profits dropped, but electric generation zoomed upward allowing Rapid City, SD-based Black Hills Corp. Thursday to report third quarter profits of $22.3 million, or 66 cents/share, compared to red ink for the same period last year (a loss of $23.9 million, or 73 cents/share). For the first nine months this year, net income was $60.2 million, or $1.80/share, compred with $6.6 million, or 20 cents/share, for the same period in 2005.

The IntercontinentalExchange continued its upward surge of futures trading activity and commissions on its over-the-counter (OTC) business with new records in both areas in September. It was the ninth consecutive record month for ICE futures. At the same time the rival New York Mercantile Exchange (Nymex) reported that as of Sept. 29, trading in a number of areas in the first nine months of 2006 had exceeded totals traded in all of 2005.

The upward pressure on energy and other commodity prices worldwide has been because of the “sluggish response of production to rising demand, particularly for energy and metals and minerals,” according to a United Nations report. However, the influx over the last three years of a large number of speculators with no interest in the commodity itself “may have distorted” near term and futures prices.

The healthy year-over-year natural gas storage surplus could be slimmed down rapidly this winter — putting upward pressure on natural gas prices — if the 2007 Farmers’ Almanac weather forecast holds up. “Shivery is not dead,” editor Peter Geiger said, alluding to the winter weather forecast in the latest edition of the 188-year-old publication.