6:00 AM, 15 May 2010
Reuters
NEW YORK - US natural gas futures ended lower, hit by a sharp slide in crude, mild weather forecasts and high inventories despite Thursday's supportive weekly storage report and signs the economy is improving.
June natural gas slipped 2.7 cents to settle at $US4.312 ($A4.82) per million British thermal units after trading between $US4.252 and $US4.35. For the week, June was up seven per cent and managed its second straight higher weekly close.
Summer months also finished lower, with August ending down 3.3 cents at $US4.478.
"We broke to a new high yesterday but haven't seen much follow through. Gas is holding pretty well though despite the fact oil is coming unglued, and we could see more upside next week," said one southern-based trading advisor, adding long liquidation after recent gains pressured the complex.
US Energy Information Administration data on Thursday showed total domestic gas inventories rose 94 billion cubic feet to 2.089 trillion cubic feet for the week ended May 7, a record high for this time of year and a level not normally reached until early June.
Most traders agreed the weekly build was supportive, noting it was below expectations in the 100 bcf area and drove the front month contract to a two-month spot high of $US4.414.
But while the storage report showed the surplus to year-ago held steady at about 97 bcf, or five per cent, the excess to the five-year average grew by 10 bcf to 325 bcf, or 18 per cent, a comfortable cushion in rebuilding stocks for next winter.
If weekly stock builds through October match the five-year average pace, inventories will begin next heating season with a comfortable 3.808 tcf in the ground, just below last November's record high of 3.837 tcf and about nine per cent above average.
Early injection estimates for next week's EIA report range from 63 bcf to 93 bcf versus a 100 bcf build for the same week last year and a five-year average gain for that week of 93 bcf.
Recent price gains have been backed by several factors including a falling gas rig count, firm cash prices and more positive economic data that should lead to stronger demand.
While concerns persist increased shale drilling could keep the market oversupplied, recent gas rig declines have some expecting production to finally slow later this year.
Baker Hughes data Friday showed the gas drilling rig count fell 2 this week, its third drop in four weeks following 16 straight weekly gains that drove the count to a 14-month high.
Strong manufacturing data on Friday again raised expectations demand from the industrial sector, which accounts for 30 per cent of total gas use, should be up significantly this year and help tighten an oversupplied market.
EIA this week raised its estimate for US gas consumption in 2010, expecting it to be up about three per cent. That should translate into a tighter supply-demand balance, with production only expected to see a 1.3 per cent gain.
Technical traders said Thursday's breach of resistance in the high-$US4.30s could signal more upside, particularly with funds still heavily short gas futures, but most agreed the lower close Friday cast doubts about further gains.
Many traders remained skeptical of any upside, at least until air conditioning loads pick up, with inventories still at record highs and production still climbing.
After a cold start to the week, AccuWeather.com expects temperatures in the Northeast and Midwest, key gas consuming regions, to vary on either side of normal for the next week or more, as highs swing from the upper-60s to low-70s Fahrenheit.
Chart traders now pegged front month resistance at $US4.50 and then at $US4.60 and $US4.69, the 38.2 per cent Fibonacci retracement. Support was seen first at the 40-day moving average in the $US4.07 area, and then at the recent six-month spot low of $US3.81 and in the $US3.66 area.
In the cash market, Henry Hub weekend quotes edged up a penny to $US4.27, with late morning deals little changed from Thursday at about 9 cents under NYMEX.
Next-day prices on Transco pipeline at the New York City gate shed 2 cents to $US4.58 on the mild weekend outlook, while Chicago was 1 cent lower at $US4.33.
The NYMEX 12-month Henry Hub strip lost 7.6 cent to finish at $US5.01. Henry Hub open interest on May 13 fell 3,662 contracts to 870,095 on near record volume of 402,506.
Source: http://www.businessspectator.com.au/bs.nsf/Article/NYMEX-Natural-gas-settles-lower-with-weak-crude-we-5FR42?OpenDocument
Reuters
NEW YORK - US natural gas futures ended lower, hit by a sharp slide in crude, mild weather forecasts and high inventories despite Thursday's supportive weekly storage report and signs the economy is improving.
June natural gas slipped 2.7 cents to settle at $US4.312 ($A4.82) per million British thermal units after trading between $US4.252 and $US4.35. For the week, June was up seven per cent and managed its second straight higher weekly close.
Summer months also finished lower, with August ending down 3.3 cents at $US4.478.
"We broke to a new high yesterday but haven't seen much follow through. Gas is holding pretty well though despite the fact oil is coming unglued, and we could see more upside next week," said one southern-based trading advisor, adding long liquidation after recent gains pressured the complex.
US Energy Information Administration data on Thursday showed total domestic gas inventories rose 94 billion cubic feet to 2.089 trillion cubic feet for the week ended May 7, a record high for this time of year and a level not normally reached until early June.
Most traders agreed the weekly build was supportive, noting it was below expectations in the 100 bcf area and drove the front month contract to a two-month spot high of $US4.414.
But while the storage report showed the surplus to year-ago held steady at about 97 bcf, or five per cent, the excess to the five-year average grew by 10 bcf to 325 bcf, or 18 per cent, a comfortable cushion in rebuilding stocks for next winter.
If weekly stock builds through October match the five-year average pace, inventories will begin next heating season with a comfortable 3.808 tcf in the ground, just below last November's record high of 3.837 tcf and about nine per cent above average.
Early injection estimates for next week's EIA report range from 63 bcf to 93 bcf versus a 100 bcf build for the same week last year and a five-year average gain for that week of 93 bcf.
Recent price gains have been backed by several factors including a falling gas rig count, firm cash prices and more positive economic data that should lead to stronger demand.
While concerns persist increased shale drilling could keep the market oversupplied, recent gas rig declines have some expecting production to finally slow later this year.
Baker Hughes data Friday showed the gas drilling rig count fell 2 this week, its third drop in four weeks following 16 straight weekly gains that drove the count to a 14-month high.
Strong manufacturing data on Friday again raised expectations demand from the industrial sector, which accounts for 30 per cent of total gas use, should be up significantly this year and help tighten an oversupplied market.
EIA this week raised its estimate for US gas consumption in 2010, expecting it to be up about three per cent. That should translate into a tighter supply-demand balance, with production only expected to see a 1.3 per cent gain.
Technical traders said Thursday's breach of resistance in the high-$US4.30s could signal more upside, particularly with funds still heavily short gas futures, but most agreed the lower close Friday cast doubts about further gains.
Many traders remained skeptical of any upside, at least until air conditioning loads pick up, with inventories still at record highs and production still climbing.
After a cold start to the week, AccuWeather.com expects temperatures in the Northeast and Midwest, key gas consuming regions, to vary on either side of normal for the next week or more, as highs swing from the upper-60s to low-70s Fahrenheit.
Chart traders now pegged front month resistance at $US4.50 and then at $US4.60 and $US4.69, the 38.2 per cent Fibonacci retracement. Support was seen first at the 40-day moving average in the $US4.07 area, and then at the recent six-month spot low of $US3.81 and in the $US3.66 area.
In the cash market, Henry Hub weekend quotes edged up a penny to $US4.27, with late morning deals little changed from Thursday at about 9 cents under NYMEX.
Next-day prices on Transco pipeline at the New York City gate shed 2 cents to $US4.58 on the mild weekend outlook, while Chicago was 1 cent lower at $US4.33.
The NYMEX 12-month Henry Hub strip lost 7.6 cent to finish at $US5.01. Henry Hub open interest on May 13 fell 3,662 contracts to 870,095 on near record volume of 402,506.
Source: http://www.businessspectator.com.au/bs.nsf/Article/NYMEX-Natural-gas-settles-lower-with-weak-crude-we-5FR42?OpenDocument
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