fmx | energy | connect - Gas Petrospective

Categories:

Tools

FMX 2010 Energy Expiration Calendar

follow FMX on

Data Reports:: market snapshot; energy >> crude report; energy >> options report; energy >> natural gas report; commodities >> metals report; weather >> full report

<< Cameron Hanover – Daily Energy Hedger – July 16, 2010 | Financial Reform Bill: Impact on the Energy Industry >>

Gas Petrospective – July 16, 2010

July 16 2010, 09:22

Gas Petrospective – July 16, 2010

Nymex

Natural gas prices rallied 28 cents yesterday in an extremely strong session that saw prices take back much of what they had lost in previous sessions and more. Yesterday’s low at $4.288 had established a new recent low, but it was clear that there was good scaled-down buying over the last several sessions. We were making new lows, but only by a cent or two or maybe three each day. Once the bulls found a reason to buy, the advance out-pointed several days of losses.

This week’s storage injection figure of 78 bcf could have been used as an excuse to sell prices lower. But, yesterday, traders saw the build (two bcf more than the average estimate of 76 bcf) as a bullish development because we had a build of 88-90 bcf a year ago, with a five-year average injection figure of 89-97 bcf (precise date and similar Friday).

The year-to-year deficit increased from 23 bcf (down 0.82%) to 33 bcf (down 1.15%) and the surplus against the five-year average went from 287 bcf (11.51%) to 274 bcf (10.67%). While these represent improvements, they are not improvements unseen before. In fact, we have seen – and ignored – improvements that were even more bullish. Market observers also pointed to forecasts calling for hot weather, but we actually have ignored these as well, recently. We think that funds suddenly decided to buy yesterday, and that their buying pushed quotes higher. We believe they have been buying, on a scaled-down basis, for the last week. Curiously, they were selling aggressively during the heat wave seen a week ago, which was reflected in this week’s figures. Given the extraordinary heat we had, we could have seen an even smaller injection number. The fact that we didn’t, though, could have been dressed up as a bearish factor. Because funds seem to have been buying, it wasn’t.

Volatility Term Structure