Weekly

From the 125 Bcf weekly storage injection reported by EIA last week, analysts at Raymond James & Associates calculate that there has been a 3-4 Bcf/d decrease in gas demand from fuel switching and a 0.75 Bcf/d increase in gas supply because of gas liquids being left in the gas stream due to low liquids margins. However, those two factors will be impacting the gas market for only a short period, because of low NGL and fuel oil/distillate inventories, the analysts said in their Energy Stat of the Week. The analysts also noted the “equilibrium gas price” now appears to be somewhere between $5-7/MMBtu.

Change was in the air right from the outset of natural gas futures trading Wednesday. After opening higher in three out of the last four sessions, gas futures gapped lower at the opening bell Wednesday amid a concert of fund and local selling. However, when it became apparent that last week’s lows in the mid $2.70s were unobtainable, the market reversed its direction and climbed through several key levels of resistance in the last hour of trading. The August contract gained 15.3 cents to close at $3.042, its highest daily settle since July 3. At 151,295, volume was extremely heavy.

Change was in the air right from the outset of natural gas futures trading Wednesday. After opening higher in three out of the last four sessions, gas futures gapped lower at the opening bell Wednesday amid a concert of fund and local selling. However, when it became apparent that last week’s lows in the mid $2.70s were unobtainable, the market reversed its direction and climbed through several key levels of resistance in the last hour of trading. The August contract gained 15.3 cents to close at $3.042, its highest daily settle since July 3. At 151,295, volume was extremely heavy.

Mirant shares rose sharply last Monday and remained in positive weekly territory on Friday after CEO Marce Fuller said the company would beat earnings forecasts and should have a solution to its credit woes in place before the end of the summer. However, the solution is likely to look a lot different than what was expected a few months ago when the idea was first announced, she said.

The weekly withdrawal from storage was slightly below average market expectations of about 90 Bcf but not surprising in light of the week’s warmer than normal weather. Working storage levels at 2,212 Bcf remain incredibly high with 1.1 Tcf more working gas than at the same time last year and 675 Bcf more than the five-year average.

With the AGA report of yet another weekly injection of 7 Bcf for the second week of November and mild weather continuing across most of the country, natural gas spot prices tumbled lower again Wednesday, causing some unusual price spreads between regions and some significant storage plays for those with a little space still available. The Rocky Mountain region once again was the exception, with sharp increases attributed to a short-term storage play.

Weekend prices bowed under the weight of the umpteenth huge weekly storage injection report and generally mild weather in the key Midwest and Northeast market areas. Despite reports of air conditioning load starting to pick up to near-normal summer levels in the South and Midcontinent, quotes declined between a nickel and 20 cents at most points, with much bigger plunges seen in California.

Surpassing most expectations yet again, the weekly storage injection figure announced yesterday by the American Gas Association sent natural gas futures spiraling lower late in the session yesterday, pressing the expiring contract to fresh 13-month lows. With that selling pressure, July went off the board at $3.182, down 21.5 cents for the session and 62.8 cents below where it was when it began its tenure as prompt month on May 29.

Carving out a wide 15-cent trading range on the daily charts, prompt month natural gas futures continued its volatile temperament yesterday as traders tested both the upside and the downside. As it turns out, neither thrust attracted much in the way of additional buying or selling, leaving the market to chop sideways to slightly higher Tuesday. July finished at $3.981, up 4.2 cents on the day, but nearly 7 cents below its high trade.