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Weekly Energy Market Update March 25, 2013

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Weekly Energy Market Update video for March 25, 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, due to ongoing support from cold weather and storage withdrawals, while strong resistance has kept the Prompt Month under $4.00 - except for a few intra-day trades. April futures closed Friday at $3.927, up approximately 5 cents for the week.
  • The March cold weather has been impressive and has drastically changed the natural gas storage picture over the last few weeks. There are three more withdrawals still expected, while injections were underway at this time a year ago. Slight production declines and significant nuclear plant outages are also increasing withdrawals.
  • The EIA reported a withdrawal of 62 Bcf for the week ending March 8. This was smaller than expectations but much larger than last year. The current inventory through March 15 is 1,876 Bcf, which leaves a deficit of 502 Bcf or 21% versus last year and a surplus against the 5-year average (162 Bcf or 9%). Note that 4 Bcf of gas was “reclassified,” which means that the actual weekly change was 66 Bcf without that reclassification.
  • Although both total gas and horizontal rig counts have generally stabilize since November, as prices are higher than last spring, we did see large decreases of both total rigs (-13) and horizontal rigs (-31) last week.That leaves horizontal rigs at their lowest levels since August 2010. Overall, production is up versus a year ago, but down since the November peak.

Posted: March 25, 2013