Energy Investors Eye Arctic Blast
Natural gas and energy sector investors are monitoring a frigid arctic mass that is moving into the mid section of the United States.
Natural Gas Rallies On Forecast
Natural gas prices rallied on Monday after forecasters predicted colder weather in the coming weeks.
Natural gas for January delivery on the New York Mercantile Exchange settled floor trade 31 cents, or 5.32%, higher at $6.136 a million British thermal units.
Tim Evans an analyst with Citi Futures Perspective in New York, said the
weather outlook was contradicting earlier forecasts for a
warmer-than-normal January.
"It
looks like it is going to be cold," Evans said. "That's what the
weather forecasts are telling us, and that's what the natural gas price
is telling us."
The
National Weather Service forecast for Jan. 3 to Jan. 7 calls for
above-normal temperatures across the Northeast and mid-Atlantic and
near-normal conditions in the Midwest. However, those temperatures are
expected to turn colder.
The
NWS expects colder-than-normal temperatures to stretch east -- from
parts of California and across the Midwest into the Northeast,
according to the agency's 8- to 14-day outlook.
Analysts
said those temperatures will likely spur demand for heating and help
draw down natural gas storage levels, which are currently at
above-average levels. Natural gas in U.S. storage for the week ended
Dec. 19 stood at 3.020 trillion cubic feet - 3.4% above the five-year
average.
Matt
Rogers, a meteorologist with the private forecasting firm MDA EarthSat
Weather, said the weather models are showing colder temperatures next
week.
"Starting around the middle of next week we should start seeing sub-zero temperatures in the Midwest and the Plains," he said.
Natural Gas Usage To Rise In The Rockies
Cold weather is sweeping across the Rockies and interior west as the mercury rises in the east and southeast.
Natural Gas & Heating Oil Usage Increases
Natural gas and distillate heating oil usage is set to rise in key areas across the eastern third of the United States. Key natural gas regions such as Georgia and Florida are seeing low temperatures which are 10 degrees below normal. Arctic weather is forecast to continue throughout the area with the mercury dropping below 25 in Atlanta on Monday night.
Natural Gas Investors Welcome Arctic Temperatures
Temperatures across North America are plummeting as an arctic cold front travels down from Canada. Forecasts call for the mercury to drop into the 20s in key natural gas areas from Georgia to Texas.
Natural Gas Prices Hit 13 Month Low
In trading on the New York Mercantile Exchange, natural gas for November delivery fell 35.8 cents, or 5.3 percent, to settle at $6.419 per million British thermal units. This is the lowest closing price since Sept. 25, 2007. Prices are down 5.1 percent from a year ago.
Natural Gas Prices Hit New Lows
Natural gas spot prices in the Lower 48 States this report week declined to their lowest levels this year even as disruptions in offshore Gulf of Mexico production continue in the aftermath of Hurricanes Ike and Gustav. During the report week, the Henry Hub spot price decreased $0.83 per million Btu (MMBtu) to $6.58.
At the New York Mercantile Exchange (NYMEX), the price of the near-term contract (November 2008) decreased to its lowest price since September 2007, closing at $6.742 per MMBtu yesterday (October 8). The net change during a week in which the price decreased each trading day was $0.986 per MMBtu.
As of Friday, October 3, working gas in underground storage totaled 3,198 billion cubic feet (Bcf), which is 2.2 percent above the prior 5-year (2003-2007) average.
The price of crude oil declined steeply, decreasing 9.5 percent during the report week to below $90 per barrel for the first time since February 7. The West Texas Intermediate (WTI) price yesterday averaged $88.91 per barrel, or $15.33 per MMBtu, which was $9.32 per barrel lower than the previous Wednesday.
Oil & Gas Investors Eye Forecasts
Oil and natural gas investors are evaluating predictions by Joe Bastardi that the 2008-2009 winter will be one of the coldest of the past decade.
Bastardi predicts severe cold to arrive to the East in December and for the Midwest and East to experience one of the most frigid winters in years.
Cold weather leads to increased energy usage with heating oil (distillates) being primarily used in the East and natural gas being favored in the Midwest.
Bastardi states: "The winter as a whole in the population-dense Eastern third of the nation will be a one-two punch of higher heating prices and lower temperatures,"
Oil & Gas Investors Await Damage Assessment
At least 13 refineries in Texas remain shut down as damage from Ike is assessed. Gulf Coast refineries and ports are the source of about 50 percent of the fuel and crude used in the eastern half of the U.S. Plants operated by Exxon Mobil, Valero Energy, ConocoPhillips, and Royal Dutch Shell are affected.
