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Weekly Energy Market Update September 9, 2013

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Please visit the Direct Energy Business online customer education center, Energy Insights, to view the Weekly Energy Market Update for September 9, 2013.

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

The NYMEX started strong last week, but finished weakly, with two down days in a row for the first time in a month. Last week's bearish storage report, as well as a lack of ongoing bullish fundamentals, stemmed the month-long rally that had pushed the prompt from $3.24 to $3.68. Long-term prices moved in sync with near-term prices. The Prompt Month closed down 5 cents to $3.53 (after a mid-week high settle of $3.68), the 12-Month Strip closed down 7 cents to $3.78 and Calendars '14, '15 and '16 all fell 6-7 cents to $3.87, $4.08 and $4.20 respectively.

Modest late summer heat was not enough to push prices higher, as storage injections and production remain strong, and summer is winding down with very little threat from hurricane season.

Last week the EIA reported 58 Bcf injection, which was above expectations and above last year (33 Bcf) but below the 5-year average (60 Bcf). This is the 23rd consecutive injection that has exceeded the same week last year. Current inventory through August 30 is 3,188 Bcf, which is 6.2% below last year and now 1.4% above the 5-year average. Injections for the next two weeks are expected to be far above both last year and 5-year average.

Forecasts for this week are quite hot, which should stoke demand. And, we are now in the peak of hurricane season and there has been some increased activity: Gabrielle passed and Humberto is in the Atlantic, but neither is a threat to the U.S.

Overall, the rangebound trend is still in place, with shale limiting upside and more downside being possible - though we do not expect a repeat of 2012 lows. The long-term outlook is less certain, with bearish (shale) and bullish (LNG exports, coal retirements) factors both weighing in.

Posted: September 09, 2013