Gas Petrospective – October 8, 2010

Natural gas prices gave back Wednesday’s gains and then started digging a new hole in reaction to this week’s EIA underground storage report. It showed a larger-than-expected increase in storage levels and it pressed front-month gas quotes down to their critical support at $3.61.

Yesterday’s settlement prices was just above the $3.61 support and was the lowest final price since September, 2009, more than a year ago. The expiring November is at the lowest price for a November contract in October since 2001.

Natural gas just has had no luck as a part of any investment asset group. It has had an extraordinarily difficult time breaking into that group and, whenever it has, it has not been able to maintain itself as a member of that group for very long. We still do not understand how oil can be the exciting asset play it has become while natural gas has remained as the red-headed step-son of the energy group. Investors have been jumping head-over-toes to buy oil; on Tuesday and Wednesday, some 67,000 new contracts were added in crude oil futures on the Nymex. Over those two days, some 7,500 contracts were liquidated in natural gas futures. It really makes very little sense to us.

Underground storage levels are returning, week by week, to the levels (record) seen a year ago. This week’s injection of 85 bcf exceeded last year’s 69 bcf and the five-year average of 66-67 bcf. It was also more than the 78 bcf predicted by survey.

 Technical Recap

 NG Options Report

Premium Subscribers (click here to register):

Volumes & Open Interest

End Of Day Straddles

Trade Blotter

Settlements