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Weekly Energy Market Update July 15, 2013

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Weekly Energy Market Update video for July 15, 2013. 

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

  • Natural gas gained support last week, mostly due to weather forecasts showing that, for much of the country, summer is finally here.
  • Much-expected heat in the East drove buying interest and short-covering gains ahead of the weekend break. The $3.60 key technical trading level has proved difficult to break through and stay below.
  • Last week the EIA reported an injection of 82 Bcf, which was in line with expectations of 83 but well above last year (34 Bcf) and the five-year average (74 Bcf). This was the 15th consecutive injection that has exceeded last year for the corresponding week. Current inventory through July 5 stands at 2,687 Bcf, which is 443 Bcf (14.2%) less than last year and now only 22 Bcf (1.1%) below the five-year average.
  • The summer dip we’ve been talking about is here (we are actually below the bottom of the expected range of summer prices), thanks to strong supply, mild weather and large injections into storage. More downside is possible but price support should eventually come if sustained lower prices stimulate demand (coal-to-gas switching) and suppress supply (shale cutbacks). Weather continues to be the big risk in the short-term.

Posted: July 15, 2013