Gas Petrospective – November 23, 2010

Natural gas prices were up another 10.7 cents per million Btu on Monday, with colder temperature forecasts for major gas-consuming regions the biggest feature of the trading day. Observers noted wide agreement among meteorologists that the final few days of November, carrying over into the first few days of December, will be colder than normal in the Midwest and along much of the East Coast. The colder temperatures should boost heating demand and should give us bigger (than might otherwise be the case) pulls from underground storage.

This week’s EIA storage figures will be released a day early, on Wednesday, at noon, because of Thanksgiving on Thursday. A large number of brokers, traders and analysts have taken off the full week, and numbers more will be watching this week’s reports from home or will return to them next week. The reaction will be significantly less durable this week, and much of the reaction will be condensed into the hour or two immediately after the report. This is unlikely to be one of those ‘creeping’ or delayed reactions. Traders will look at the figures, react, then many will hit the road.

With less time to react this week, there may be three possible responses. If we get another build, even of just one bcf, we will have a new record, which is what the headlines will trumpet. One group would react to that. Another group would be keen to compare this year to previous years. We had a build last year, but the five-year average is a drawdown of almost 14 (13.8) bcf. The relative comparisons would drive them. And the third set of possible responses will come from those who could see any draw at all as a sign that withdrawal season has begun, that a page has turned and that forecasts for colder weather will start to boost prices.

 Technical Recap

Natural Gas Options Report



Premium Subscribers (click here to register):

Volumes & Open Interest

End Of Day Straddles

Trade Blotter

Settlements