The following is a summary of last week’s market activity and the market outlook:
- NYMEX natural gas saw quite a bit of volatility last week and in the end, finished the week on the strong side. The Prompt Month (October) ended the week up 15 cents, the 12-month Strip was up 10 cents and Calendar ’14 was up 8 cents, while long-term prices saw very little impact. Calendar ’15 was up only 2 cents Calendar ’16 ended exactly where it started..
- The EIA reported an injection of 65 Bcf for the week ending Sept. 6, 2013. This was below expectations of 68 Bcf but above last year (27 Bcf) and the 5-year average (62 Bcf). This is now the 20th consecutive injection that has exceeded the corresponding week last year and the year-over-year deficit continues to shrink each week. Current inventory through now stands at 3,253 Bcf, which is 5.0% below last year and 1.4% above the 5-year average.
- Short-term weather forecasts are caling for warmer-than-normal temperatures for the West and Texas. In the 6- to 10-day outlook, forecasts are calling for above-normal temperatures for most of U.S. except the West and Florida. The 11- to 15-day forecasts are calling for the same, except a bit cooler in the Northwest. October and November forecasts are calling for normal temps for most key regions, except California, Southeast, and Texas, which are expected to be slightly above normal in November.
- Tropical Storm Ingrid made landfall in Mexico this morning and Humberto, which has been downgraded to Tropical Storm and is about halfway between Africa and the U.S., is expected to form back into hurricane again over next two days and is being watched. Currently there are no immediate threats to North America however next month is expected to be the busiest part of hurricane season.
There is not much support for current price levels as we get into cooler overall temperatures and storage injects are expected to remain strong at least for a few more weeks however the storage deficit and upcoming winter are enough to keep prices from falling too far. Winter risks vary by region and prices are still low despite the recent rally and therefore still present good value.