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Weekly Energy Market Update April 2, 2013

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Weekly Energy Market Update video for April 1, 2013. 

The following is a summary of last week’s market activity and the market outlook:

  • The NYMEX Prompt Month hit new 18-month highs last week, while the back end of the curve barely moved or fell slightly (Calendars '14 and '15 are at $4.23 and $4.30, respectively), indicating that near-term fundamentals are not expected to last and the market is confident in upside price limits.
  • May futures closed Thursday at $4.02, up approximately 7 cents for the week. The market was closed on Friday, March 29, due to Good Friday being a NYMEX holiday.
  • The story remains the same, the very cold second half of February and a very cold March have driven up gas demand. Since Feb 14, we have experienced a significant run up in the market — the Prompt Month hit a low of $3.11 and we are currently right around $4.00, with a lot of technical trading at these levels.
  • Slight declines in natural gas production and significant nuclear generation plant outages are also increasing natural gas storage withdrawals. Last week the EIA reported a draw from storage of 95 Bcf for the week ending March 22. This was larger than expectations and, with the current inventory at 1,781 Bcf, projections are now calling for end-of-March inventory below 1,675 Bcf, which is lower than a year ago (2,437 Bcf) and lower than the 5-year average (1,710 Bcf).
  • Although both total gas and horizontal rig counts have generally stabilized since November, as prices are higher than last spring, we did see a large decrease in total rigs (39) and horizontal rigs (1) last week. Horizontal rigsare now at their lowest levels since August 2010.

Posted: April 02, 2013