Heres this guys view.US GAS: Futures Rise On Cool-Weather View; Down 1.1% On Week
Dec 03, 2010
By Matt Day
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Natural gas futures settled slightly higher Fridayas forecasts for cold weather in the coming week outweighed pressurefrom ample supplies.
Natural gas for January delivery settled 0.6 cent, or 0.1%, higher, at$4.349 a million British thermal units on the New York MercantileExchange. Futures rose for the third consecutive session, but fell 1.1%on the week.
Forecasters continue to see cold across much of the eastern half of theU.S. beginning this weekend and extending through next week. Thebelow-normal temperatures should blanket major heating markets in theMidwest and Northeast, as well as the Southeast, meteorologists with MDAEarthSat said Friday.
Natural gas prices have been bound in a narrow range since late October,rising when forecasts called for colder temperatures and a boost togas-heating demand, but frequently unable to hold on to gains amid highinventories. Futures would likely have to break above $4.50/MMBtu toprove that a seasonal advance was on, said Jimmy Tintle, an analyst withTransworld Futures. Prices can rise sharply in anticipation of winter'sheating demand.
The Energy Information Administration said Thursday that 23 billioncubic feet of gas was withdrawn from storage last week. The decline wassmaller than the expected 26-bcf decline, but nevertheless representedthe first substantial draw this season. With meteorologists in goodagreement on an early-December cold snap, larger withdrawals are seen inthe coming weeks.
The amount of gas in storage typically increases from April to November,before winter's home-heating needs begin to draw from the excesssupply.
Natural gas inventories as of Nov. 26 stood at 3.814 trillion cubicfeet, 10% above the five-year average, the EIA reported. Stockpilesearlier in the month climbed to a record high of 3.843 tcf.
Meanwhile, U.S. drilling activity has held steady despite low prices.The number of rigs drilling for natural gas increased by eight thisweek, to 961, according to oil-field services company Baker Hughes Inc.(BHI), a 28% increase from the same week last year. Some analysts havepredicted this year that gas producers would cut back on drilling tolimit supply growth and protect their profitability, but market-movingdeclines haven't materialized.
FUTURES SETTLEMENT NET CHANGE
Nymex Jan $4.349 +0.6c
Nymex Feb $4.359 +0.9c
Nymex March $4.324 +1.2c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $4.17-$4.37 $4.10-$4.35
Transco 65 $4.22-$4.38 $4.17-$4.40
Tex East M3 $4.61-$4.94 $4.52-$4.80
Transco Z6 $5.15-$5.40 $5.00-$5.38
SoCal $4.18-$4.31 $4.21-$4.27
El Paso Perm $4.04-$4.20 $4.08-$4.16
El Paso SJ $4.04-$4.13 $4.08-$4.13
Waha $4.02-$4.23 $4.04-$4.14
Katy $4.08-$4.27 $4.10-$4.25
-By Matt Day, Dow Jones Newswires; 212-416-4986; matt.day@dowjones.com