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Weekly Energy Market Update August 4, 2014

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Below is the Direct Energy Business Weekly Energy Market Update video for August 4, 2014. We embedded this video right into the blog post, so you don’t have to leave this page to view it. The written summary is still below too.

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

Another flat week as natural gas futures traded sideways last week. $3.80ish seems to be a comfortable range as tests higher and lower both failed during the week.

Little change in fundamentals: mild July & August temps, strong production, and large storage injections are all bearish.

Storage considerations:
- Based on large deficit, expert had predicted inventories going into winter to be between
3,300 to 3,500 Bcf compared to 5-year average 3,858 Bcf.
- To reach 3,300 Bcf, must exceed 5YA injections by 9 Bcf/wk.
- To reach 3,500 Bcf, must exceed 5YA injections by 24 Bcf/wk.
- To reach 3,858 Bcf, must exceed 5YA injections by 50 Bcf/wk
- Injections have exceeded the 5-year average by 28 Bcf/wk over the last 12 weeks
- So based on trend, reaching 3,500 seems to be a realistic possibility.

Domestic dry gas production posted a new record at 63.9 Bcf/Day on July 30th.

Long-term prices have fallen due to benefits of strong production, but are no longer backwardated as near-term prices have fallen. And bullish factors remain in place due to potential LNG exports, EPA regulations and growing industrial demand.

Posted: August 04, 2014