We had an inverse but equivalent situation here. Rather than the distribution side we were hearing from the other end, production, that the E&P's were more than willing to sell at the $4 level.
This morning's high on the front futures was $4.0030.
First up, Bloomberg:
Natural Gas Fluctuates After Smaller-Than-Expected Supply Drop
Natural gas futures fluctuated after trading at an 18-month high in New York following a government report showing that U.S. stockpiles declined by less than expected last week.Here's the 5-minute chart via FinViz:
Gas slipped after rising to $4.003 per million British thermal units, the highest level since Sept. 15, 2011. Energy Information Administration data showed inventories fell 62 billion cubic feet in the week ended March 15 to 1.876 trillion cubic feet. Analyst estimates compiled by Bloomberg showed a withdrawal of 70 billion. A survey of Bloomberg users predicted a decrease of 69 billion.
“It’s the first bearish storage number we’ve had in a while, so you would expect to see some selling,” said Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “The market may not be ready to sustain this $4 pricing.”
Natural gas for April delivery fell 1 cent to $3.95 per million British thermal units at 10:45 a.m. on the New York Mercantile Exchange. Trading volume was more than double the 100-day average for the time of day. Gas traded at $3.698 [sic] before the storage number was released at 10:30 a.m. in Washington....MORE
$3.999, last.
From the Energy Information Administration:
Weekly Natural Gas Storage Report
for week ending March 15, 2013. | Released: March 21, 2013 at 10:30 a.m. | Next Release: March 28, 2013
| Working gas in underground storage, lower 48 states Summary text CSV JSN | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Historical Comparisons | |||||||||||||||
| Stocks billion cubic feet (Bcf) |
Year ago (03/15/12) |
5-Year average (2008-2012) |
|||||||||||||
| Region | 03/15/13 | 03/08/13 | change | (Bcf) | % change | (Bcf) | % change | ||||||||
| East | 783 | 830 | -47 | 1,050 | -25.4 | 762 | 2.8 | ||||||||
| West | 339 | 339 | 0 | 346 | -2.0 | 262 | 29.4 | ||||||||
| Producing | 754 | 769 | -15 | 982 | -23.2 | 691 | 9.1 | ||||||||
| Salt | 180 | 175 | 5 | 231 | -22.1 | 114 | 57.9 | ||||||||
| Nonsalt | 574 | 594 | -20 | 751 | -23.6 | 577 | -0.5 | ||||||||
| Total | 1,876 | 1,938 | -62 | 2,378 | -21.1 | 1,714 | 9.5 | ||||||||
Reclassifications from base gas to working gas resulted in increased
working gas stocks of approximately 4 Bcf for the week ending March 15,
2013 in Producing Region salt dome facilities.
Just to be clear, we didn't write the headline "Natural Gas Pops, Now Pennies Below $4.00 Ceiling" because an even number is magical or mystical or "psychologically important".Summary
Working gas in storage was 1,876 Bcf as of Friday, March 15, 2013, according to EIA estimates. This represents a net decline of 62 Bcf from the previous week. Stocks were 502 Bcf less than last year at this time and 162 Bcf above the 5-year average of 1,714 Bcf. In the East Region, stocks were 21 Bcf above the 5-year average following net withdrawals of 47 Bcf. Stocks in the Producing Region were 63 Bcf above the 5-year average of 691 Bcf after a net withdrawal of 15 Bcf. Stocks in the West Region were 77 Bcf above the 5-year average after no net change. At 1,876 Bcf, total working gas is within the 5-year historical range....MORE
We've been babbling about $4.00 because that's where producers were willing to sell, giving up further upside in return for a guaranteed (twice as high as last year) price.
Recently:
Mar. 14
Natural Gas: EIA Reports Much Larger Than Expected Withdrawal, Futures Pop
Mar. 15
"Natural gas: commodity market’s ‘sleeping giant’"
The demand side is on the come in transportation fueling but the supply side has already begun a very tiny decline and if the producers weren't in such tough shape that they have to hedge at $4.00 so they aren't forced to sell if the market dipped to $3.00 we'd probably be at $4.25 right now....Mar. 19
Natural Gas Pops, Now Pennies Below $4.00 Ceiling
...$4.00 is going to be tough to clear but there is a lot of consumption and a very slowly declining production picture.Mar. 19
Musings: Natural Gas Output Falls In December; Start Of A Trend?
