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Weekly Energy Market Update June 3, 2013

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Weekly Energy Market Update video for June 3, 2013.

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

We saw significant price declines last week, especially for the front end of the curve. June futures expired weakly at $4.14. July, which is now Prompt Month, fell to $3.98 ? down 30 cents and within 3 cents of its lowest close since March 14. The 12-month Strip fell by 24 cents to $4.13 and hit its low since April 3.

Despite above-normal temperatures over the weekend that just ended, weather forecasts thereafter are calling for mostly "normal" temperatures for the next two weeks.

Storage injections continue to be strong and were larger than a year ago for the fifth consecutive week. Last week, EIA reported an injection of 88 Bcf, which was slightly above expectations, but well above last year, thereby continuing to erode the year-over-year deficit. Current inventory through May 24 is 2,141 Bcf, which is 664 Bcf (23.7%) less than last year and 88 Bcf (3.9%) below the 5-year average.

Net gas imports remain low due to reduced Canadian and LNG imports and growing U.S. exports to Mexico. Since 2007, net imports have declined by 4.92 Bcf/day (7% of U.S. supply). Meanwhile, U.S. production has picked back up over the last month due to price strength since the winter. At 65.4 Bcf/day, domestic product is back to the peak levels of November 2012 and up by 2.8% compared to one year ago.

Long-term prices have been much stronger since the curve was briefly backwardated at the end of April. Since April 29, the 12-month Strip has fallen by 37 cents, while Calendar 17 has risen by 22 cents, shifting value from the back end to the front end of the curve.

Posted: June 03, 2013