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Weekly Energy Market Update May 12, 2014

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Below is the Direct Energy Business Weekly Energy Market Update video for May 12, 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.

After breaking out of their $4.25-$4.65 range on April 17, natural gas futures fell hard the past three days, and have returned to that range after flirting with prices as high as $4.80. The prompt month and the 12-mo strip each lost 15 cents since last week, while calendar strips ‘15, ‘16, and ‘17 lost eleven, eight, and three cents, respectively. The prompt month had been range-bound since the end of February.

Short-term weather forecasts are mixed for different regions of the country, but temperature anomalies look to be easing in the latter half of May.

Days 1-5: Extremely warm along the West Coast and moderately warm in the eastern half of the U.S., while everywhere from the Rockies through the Midwest is expected to be below-normal.

Days 6-10: Hot weather moderates to 1-3° above normal, but spreads further east to cover more of the Southwest, while the area of below-normal temperatures shrinks and moves to cover the Southeast from LA to NY.

The EIA reported the fourth injection of the season, and the first to instill confidence in the market at the pace of storage rebuilding. Gas inventories grew by 74 Bcf for the week ended May 2, 2014. This beat expectations by 4 Bcf, was smaller than last year (+81 Bcf), but greater than the five-year average (+72 Bcf). Current inventory stands at 1,055 Bcf, which is 797 Bcf (43%) below last year and 892 Bcf (48%) below the 5-year average.

This week’s storage report for the week ended May 9 is expected to be around 95, in line with last year’s build and better than the five-year average of 82 Bcf. The EIA is projecting a record-high addition to storage inventories this year, averaging about 90 Bcf/week. The next three storage injections are expected to beat that average.

Posted: May 12, 2014