Natural Gas Futures Fall on High Supply Levels
Gas futures have declined 2.8% on the New York Mercantile Exchange so far this year. (image: blogs.reuters.com)
Natural gas futures fell 6.4 cents today, for the first time in three days, to finish at $4.282 per million British thermal units on the NYMEX, according to Bloomberg Businessweek. The drop was caused by speculation that high power-plant demand won’t be enough to surpass rising supply levels.
The Energy Department’s forecast for natural gas production has 2011 working towards record setting levels. Analysts expect production to continue at this pace, as companies explore and extract fuel from huge, gas-rich underground shale formations. In a more long term look, Bloomberg predicted inventories could rise to 3.9 trillion cubic feet by the end of October.
“We’ve had to move down in gas rigs, but generally speaking we’re well above the 800 to 825 number where you’d actually see an impact to natural gas production,” said Carl Neill, an energy consultant for a Georgia risk management firm. “The expectation is that we’ll have plenty of gas in storage at the end of the summer.”
*Natural gas is the most widely used heating fuel in the United States.
Natural Gas Futures High as Stockpiles Rise Less than Expected
The shaded area represents the range between the historical minimum and maximum values for the weekly series from 2006 through 2010. (image: ir.eia.gov)
Natural gas futures hit an 11-week high yesterday after storage levels rose less than traders had expected, the Wall Street Journal reported. Analysts had expected U.S. natural gas stockpiles to rise 51 billion cubic feet, but the Energy Information Administration reported the actual increase was only 47 bcf. As a result, gas spiked 10.2 cents to end at its highest price since early February, $4.412 a million British themal units on the NYMEX.
This is the second consecutive week the market has underestimated demand. Traders are expected to adjust and bring futures back down early next week. This trend indicates “a tighter than expected supply [and] demand balance,” Tim Evans, a market analyst for Citi Futures Perspective, told the Journal.
One likely reason for lower-than-expected storage is that the number of active domestic natural gas drilling rigs dropped for the third week in a row, down to 878 sites. Historically, inventories increase during the cooling season, from April to October, because companies build a surplus to prepare for upcoming winter heating needs.
*Natural gas is the most widely used home heating fuel in the United States.
Natural Gas Futures Fall as Supplies Remain Steady
High production kept supplies high and drove futures down 2.2%. (image: eia.gov)
After the Energy Information Administration released a report detailing a drop in supply of 45 billion cubic feet, much less than expected, natural gas futures hit a three-week low today, the Wall Street Journal reported. Futures fell 9.2 cents to trade at $4.054 a million British thermal units on the NYMEX today, as inventories stood well above the five-year average.
Analysts originally expected a drop between 49 and 53 billion cubic feet, according to an Associated Press energy report. “Good demand is not even putting a dent in supply,” trader Stephen Schork commented.
High supply levels are expected to continue outpacing demand for the next few months as drillers extract domestic gas from huge shale formations in the Northeast and elsewhere. However, the drop in futures was an unwelcome development for many analysts.
“We’re still at a ‘near average’ storage level, but the data was something of an emotional disappointment,” Tim Evans of Citi Futures Perspective told the Journal. “And since it follows a bearish surprise in the prior weeks it also tends to confirm that the overall supply (and) demand balance is weaker than had been thought.”
As spring temperatures begin to creep across the East Coast, futures could be curbed even further as demand for heating fuel slows. Meteorologists have predicted unseasonably warm weather this weekend spanning across the eastern two-thirds of the country.
Gas Futures Slip as April Contract Runs Out
Natural gas futures settled around 3.1% lower today on the NYMEX. (image: marketplace.publicradio.org)
After steady gains for the past two weeks, natural gas futures finally slipped today as traders took advantage of the April contract expiring, according to the Wall Street Journal. Some strategists seized the opportunity to cash out before the market begins its usual descent into spring and warmer weather, as natural gas for April delivery dropped 13.4 cents to $4.24 a million British thermal units on the New York Mercantile Exchange.
Cold spring temperatures had been driving futures up to their highest levels since early February, and there’s still a chance for similar gains before the heating season ends and demand drops off.
“We’ve been rallying for two straight weeks,” said senior market strategist for Lind-Waldock Rich Ilczyszyn. “People are booking some profits today.”
On a related note, the Energy Information Administration announced that natural gas production in the lower 48 states fell for the first time in three months today, down to 66.67 billion cubic feet a day. Recent U.S. production has been relatively high as drillers continue extraction from huge underground shale formations in the Northeast and elsewhere.
Natural Gas Futures Still Climbing on Cold Spring Temperatures
Natural gas futures rose once again, as unseasonably cool weather pervades the Midwest and East Coast. (image: guestofaguest.com)
Continuing last week’s trend, natural gas futures climbed 7.5 cent after meteorologists predicted colder-than-usual weather into the beginning of April, the Wall Street Journal reported. Still at its highest level since early February, gas for April delivery traded at $4.478 a million British thermal units on NYMEX.
In fact, senior meteorologist for WSI Corp. Dan Leonard projected that the chilly temperatures “could persist at least through the middle of the month,” from the Midwest to the East Coast, so consumers will need to continue running their heating systems for a bit longer.
Notably, the number of active rigs drilling for natural gas rose to 880 nationwide, the highest it has been in a month. This is likely one reason many analysts predict futures will soon drop off again, thanks to North American supply overwhelming the dwindling need for heating fuel at the end of the heating season.
Natural Gas Futures Continue to Rise as Cold Temperatures Persist
Meteorologists have reported that temperatures will continue trending colder than usual into the beginning of next week. (image: energybusiness.in)
Natural gas futures got a slight boost today, going up 2.5 cents, thanks to forecasts indicating that this week’s chilly weather will continue into early next week, according to the Wall Street Journal.
Since the weather should keep demand high, as people continue to use natural gas for heating, physical gas for next-day delivery traded at $4.269/MMBtu (Millions of British thermal units) on NYMEX. Jim Ritterbusch, president of Ritterbusch and Associates, commented that the cold “increases the likelihood of another storage decline” next week, which he expects will ease market pressure.
With spring temperatures set to kick in very soon, analysts and traders expect further gains like this to be fairly limited. Demand for natural gas usually bottoms out in the springtime, when it’s warm enough to turn off the heat and cool enough to not need an air conditioner.
Natural Gas Futures Hit 7-Week High
The New York Mercantile Exchange (image: hispecbuildingservices.co.uk)
After slowly climbing for seven weeks, natural gas futures hit their highest levels yesterday, due to speculation that chilly weather in the Northeast and Midwest could spark increased need for heating fuel, according to a Wall Street Journal energy report.
Though the heating season is winding down, traders and analysts were largely correct in estimating that the recent cold snap would have natural gas consumers turning their thermostats back up. Natural gas went up 8.1 cents on the New York Mercantile Exchange (NYMEX), the highest ending price since February 3rd. However, as the weather slowly warms up in the near future, traders expect to see market prices decline.
According to the U.S. Energy Information Administration, a little over half of all American households use natural gas for heating purposes, making it the most popular heating fuel by far. Several factors affect natural gas prices: weather, economic growth, imports, inventory supplies, other heating fuel prices, and more.
Heat USA February Heating Oil Price Survey
(image: biggreenoil.us)
In this second edition of the Heat USA price survey we have pulled data for the month of February 2011, which actually surpassed January as one of the most erratic and unstable months we can recall in the heating oil industry. Below we’ve described the methodology of our survey.
Regions
We have broken the price survey into two regions, the Mid-Atlantic and New England. The Mid-Atlantic is an average of prices we’ve seen in Virginia, Maryland, New Jersey, Pennsylvania and Southern New York. New England is derived from Upstate New York, Connecticut, Rhode Island and Massachusetts.
High and Low Prices
Prices can vary wildly from region to region and dealer to dealer. We’ve created a high/low/average price survey to provide a better picture of what’s happening in the marketplace. The data you see below is pulled from hundreds of conversations we have with heating oil consumers and heating oil dealers about the price of heating oil. It isn’t perfectly scientific but it might be the most accurate representation of average prices in these regions.
Full-Service and COD
We’re also displaying prices based on full-service and COD prices. To be clear, COD prices are for delivery only and there is no added value provided. In many cases, ordering oil by this method is inconvenient at best and dangerous at worst.
Heat USA is best compared to full-service companies, who maintain their own emergency service staff who take responsibility for keeping your system in good shape and your heat on even at night, weekends or holidays.
Adjusted Price
We’ve also created two HEAT prices- the actual HEAT average price for the region during the month and the adjusted price which accounts for the value of the free service contract most of our members receive. Remember that the prices below are an average over the entire month.
Here are the results:
Full Service Pricing February 2011 New England Region (Average)
Low Price -$3.69
High Price -$4.02
Average -$3.86
Cash On Delivery Pricing February 2011 New England Region (Average)
Low Price -$3.34
High Price -$3.59
Average -$3.47
Heat USA Pricing February 2011 New England Region (Average)
Average Heat USA Price -$3.66
Adjusted Heat USA Price -$3.39•
Full Service Pricing February 2011 Mid-Atlantic Region (Average)
Low Price -$3.39
High Price -$4.17
Average -$3.78
Cash On Delivery Pricing February 2011 Mid-Atlantic Region (Average)
Low Price -$3.19
High Price -$3.39
Average -$3.29
Heat USA Pricing February 2011 Mid-Atlantic Region (Average)
Average Heat USA Price -$3.70
Adjusted Heat USA Price -$3.37••
• Adjusted Heat USA Price for New England Region assumes an average value of $199 for the Heat USA service contract and an average annual consumption of 750 gallons.
•• Adjusted Heat USA Price for Mid-Atlantic Region assumes an average value of $229 for the Heat USA service contract and an average annual consumption of 700 gallons.
Obama Defends Heating Assistance Cuts with Incomplete, Misleading Reasoning
Heating oil prices have doubled since Obama took office. (image: eia.doe.gov)
Last week President Obama defended his proposal to slash funding for LIHEAP with the reasoning that energy prices have gone down since he took office. However, this dangerous generalization only holds true for one type of heating fuel, natural gas, which went down 14%. That’s great for natural gas consumers, but obviously it doesn’t apply to every American household.
In using the broad term “energy prices,” the President sidestepped some crucial details about the real trends in heating fuel costs in this country. Since he was sworn in two years ago, propane prices have gone up 26% and heating oil prices have actually doubled, increasing by 100%. The Department of Energy’s Energy Information Administration predicted that this heating season would be the most expensive ever for heating oil users.
President Obama's comments about falling energy prices only apply to natural gas. (image: boston.com)
Also, industry experts maintain that demographically, heating oil and propane consumers are older and poorer than natural gas consumers. As our country continues to endure a struggling economy and one of the harshest winters in years, we agree with the many Northeastern lawmakers calling the potential LIHEAP cuts insensitive and ill-timed. To strip the budget of a program that so many Americans rely on to survive based on incomplete information is irresponsible and potentially disastrous.
At Heat USA, we’re trying to get the word out on the truth about energy prices. Consumers have a right to be accurately informed, and politicians have a responsibility to make decisions based on all the facts. We believe heat is a basic human need everyone should have access to, so we’re doing what we can to see that this budget cut doesn’t pass.
Heat USA January Heating Oil Price Survey
(image: heatingoil.com)
In this first edition of the Heat USA price survey we have pulled data for the month of January 2011, easily one of the most volatile and troubled months we can recall in the heating oil industry. Below we’ve described the methodology of our survey.
Regions
We have broken the price survey into two regions, the Mid-Atlantic and New England. The Mid-Atlantic is an average of prices we’ve seen in Virginia, Maryland, New Jersey, Pennsylvania and Southern New York. New England is derived from Upstate New York, Connecticut, Rhode Island and Massachusetts.
High and Low Prices
Prices can vary wildly from region to region and dealer to dealer. We’ve created a high/low/average price survey to provide a better picture of what’s happening in the marketplace. The data you see below is pulled from hundreds of conversations we have with heating oil consumers and heating oil dealers about the price of heating oil. It isn’t perfectly scientific but it might be the most accurate representation of average prices in these regions.
Full-Service and COD
We’re also displaying prices based on full-service and COD prices. To be clear, COD prices are for delivery only and there is no added value provided. In many cases, ordering oil by this method is inconvenient at best and dangerous at worst.
Heat USA is best compared to full-service companies, who maintain their own emergency service staff who take responsibility for keeping your system in good shape and your heat on even at night, weekends or holidays.
Adjusted Price
We’ve also created two HEAT prices- the actual HEAT average price for the region during the month and the adjusted price which accounts for the value of the free service contract most of our members receive. Remember that the prices below are an average over the entire month.
Here are the results:
Full Service Pricing January 2011 New England Region (Average)
Low Price -$3.79
High Price -$3.99
Average -$3.89
Cash On Delivery Pricing January 2011 New England Region (Average)
Low Price -$3.10
High Price -$3.25
Average -$3.20
Heat USA Pricing January 2011 New England Region (Average)
Average Heat USA Price -$3.56
Adjusted Heat USA Price -$3.29*
Full Service Pricing January 2011 Mid-Atlantic Region (Average)
Low Price -$3.19
High Price -$4.09
Average -$3.71
Cash On Delivery Pricing January 2011 Mid-Atlantic Region (Average)
Low Price -$2.99
High Price -$3.25
Average -$3.16
Heat USA Pricing January 2011 Mid-Atlantic Region (Average)
Average Heat USA Price -$3.59
Adjusted Heat USA Price -$3.26**
* Adjusted Heat USA Price for New England Region assumes an average value of $199 for the Heat USA service contract and an average annual consumption of 750 gallons.
** Adjusted Heat USA Price for Mid-Atlantic Region assumes an average value of $229 for the Heat USA service contract and an average annual consumption of 700 gallons.
