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Market Summary: 21 Oct – 25 Oct 2013

The following is a summary of last week’s market activity and the market outlook:

  • NYMEX futures had a notable dip early in the week, breaking below $3.60, before rebounding late in the week.  Near-term prices are in the middle of the recent range, with the 12-Month Strip at $3.86 (its range has been $3.60 to 4.10 since early June), while longer-term prices are closer to the bottom of their range for the same timeframe (Calendar ’15 is at $4.09 and has ranged from $3.96 to 4.27).
  • There were two EIA storage reports last week, due to government shutdown the previous week. On Tuesday the EIA reported an injection of 77 Bcf for the week ending Oct. 11, which was below expectations (79 Bcf) but above 2012 (54 Bcf) and the 5-year average (75 Bcf).  On Thursday, the EIA reported an injection of 87 Bcf for the week ending Oct. 18, which was above expectations of 82 Bcf, above last year (64 Bcf) and above the 5-year average (67 Bcf). Current inventory through Oct. 18 is 3,471 Bcf, which is only 2.4% below last year and now 2.1% above the 5-year average. During this year’s injection season, 24 of the last 25 weeks have been larger than the same week last year.
  • Near-term forecasts have shifted dramatically, as end-of-October cold is expected to be followed by a mixture of normal and above-normal temperatures for the first half of November for the eastern half of the U.S.  Winter forecasts are consistently calling for colder weather than the last two years-–mostly because the last two years were above-normal.
  • Overall, the Prompt Month has been ranging between $3.20–3.80 and the Calendar Strips have mostly been $3.70-$4.50 since early 2012. Long-term prices are relatively low in their recent range and may still present value, especially since long-term fundamentals remain bullish compared to near-term.