Replies to This Discussion

Permalink Reply by tc on April 28, 2014 at 8:49

The market knows a lot of things, but what it is trading on is the question.  Some of the things it knows is that the injection season is off to a slow stop and the 10 day forecast for the Northeast & Midwest are cooler than normal, so weather isn't helping the injection season.  Another issue I wonder about is the price differences between hubs.  As Skip posted earlier there is a lot of NG waiting for completion & pipelines in the Marcellus, so that gas is not reaching the Henry Hub for pricing, so the prices are increasing at the headline hub, sort of the opposite of what happened with WTI and Cushing, OK.

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Permalink Reply by cocodrie man on April 30, 2014 at 0:51

Would you be willing to give a brief and basic tutorial regarding the relationship between the NYMEX Settlement price and the strip price?  I was surprised to see that the Settlement Price earlier this week was a bit lower than what the strip was indicating.  Apparently some of our more knowledgeable and experienced members see greater value in watching the Settlement Price rather than the strip price.  Why is this the case?  Unless I read the charts incorrectly, the strip price seems more optimistic about the short term future of gas prices than does the declining Settlement Price.

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Permalink Reply by Skip Peel - Mineral Consultant on April 30, 2014 at 1:14

The monthly settlement price for May is out.  $4.785.  Up from April - $4.584. The year to date average is now $4.839.  The average price through May of 2013 was $3.627. 

For the first four plus years of GHS our site member industry expert on NG pricing, marketing and transportation was Les B.  Les doesn't post anymore which I think is work related.  My focus on the NYMEX Settlement Price is because Les stated that more gas was sold under the settlement price than the spot price.  Under normal circumstances, a lot more.  And that the settlement price was more in line, as a base price, with what royalty owners would see on their monthly statements.

I would also appreciate a tutorial.

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Permalink Reply by jim weyland on April 30, 2014 at 4:19

at any given point in time there's a 'strip' price; that's the arithmetic average of the contract months comprising that strip. note: a strip can be as little as two months and up to as many you want to look at.

the last trade of a contract which occurs on settlement day is the settlement price for that month.

a way to think about things is that a strip is a snapshop image of where the market is at any point in time.  it's the contract's settlement price that essentially establishes the value of that month's gas prices..  

i'd be glad to share my knowledge with any and all, but the board has rather low baud rate. a conference call would allow for more better/faster dissemination of subject matter

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Permalink Reply by Bobi Carr ("parker") on May 1, 2014 at 5:48

How about giving a lunch lecture?  I've been bugging Skip that we should have another shale get together.

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Permalink Reply by Krkyoldhag on May 1, 2014 at 1:55

The Dow Crap Shoot..oh I mean market..knows what the manipulators tell it.

Somebody is "making a market" in Natural gas right now on business news reports.

I watched as an "expert" claim that he knows that Putin will invade Ukraine very soon and that Europe would need a secure supply of natural gas which they might not have if this happened..Natural Gas on the board went up a penny every couple of minutes and is now up to around $4.80 from the low of last week.

Now who wants to start a thread "when will natural gas reach $8  ..because its coming..It might not hold..but its coming.  Then if the thing with Putin fizzles away it will drop again like a rock.  But for now..when will it hit $8?  I think by the end of May. 

Will Putin invade Ukraine?  Why would he?  He going to get it anyway.

Is he going to humiliate Obama?  Nope..O going to do it to himself.

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Permalink Reply by 1kw6x71km1v37 on May 1, 2014 at 6:24

Not so fast:  http://www.iht.com/2014/04/15/using-ukraine-to-cook-the-planet/

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Permalink Reply by RONNY on May 1, 2014 at 10:09

Per cheap shot's web link, I guess Ms. Klein and her tree hugging ilk would rather us continue spewing billions of wasted tax dollars to failed electric car companies and solar panel scammers.  Real fuel, real dollars, real solutions, real environmental gains!!!!!!!!!!!!!!!!!!!!!!!!!!NATURAL GAS is the solution you crazy delusional woman.  Pull you head out of your A$$ and stop demonizing capitalism for bringing viable solutions to the energy and environmental table.  Thanks to everyone for letting me rant.

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Permalink Reply by cocodrie man on May 2, 2014 at 0:55

I admire Naomi Kline greatly but think her to be in error in the matter she addresses here.  Her book, "Shock Doctrine" was very important to me and others in post Katrina New Orleans.  If I read reports correctly, the U.S. has exceeded the pollution goals set forth in the Kyoto protocols (not adopted by the U.S.) by the expanded use of Natural Gas.  The only immediate and short term option to expanded use of cleaner burning natural gas is coal.  Several Chinese cities are living examples of what the increased use of coal looks like.  The availability of coal (especially from Poland) to the EU may be a temptation too great to avoid. Though U.S. natural gas shipments to Europe may not be available in the short term, the promise of such several years in the future is important to planners.  I still think Natural Gas is the bridge fuel to the future, whatever that may be.  That bridge may be longer than some would want.  Surely, the need to improve the emissions from the production and refining of natural gas is clear.  I think the industry is committed to doing so. 

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Permalink Reply by Joe Aldridge on May 2, 2014 at 2:00

CM,

Very well said. But back to the thread topic. I think we are seeing the real price of NG being seen in the market by the traders. When I started the thread "when will NG hit $5.00" last year I felt the market was way under valuing the product. I think some of the run-up though was speculation then the bottom fell out so to speak and we went to $4.30 or so. That I felt was too low and since then the price has rebounded and is in the high $4's. At this point in time that may be the true value. But for the future with the continued cool weather and the slow refill of storage I think the price will end up in the 7's to 8's before the end of the year. 

I don't see where what Putin is doing will have much to do with the price of NG. At least not at this time. In the future that may change when we have the capability to export. Right now that's in the future.

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Permalink Reply by Steve P on May 9, 2014 at 6:05

There is always the chance that Putin will lower the price of his NG and make the supply to Europe more reliable to discourage investors in LNG projects, both here and in Europe.  That would be a temporary blip but it might last for a year or more.

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Permalink Reply by Joe Aldridge on May 9, 2014 at 6:19

Steve,

I don't see where the LNG from the US is a problem for Putin. At least at the present time. Maybe 5 years from now when we can export sizable quantities but not at the present. He needs the threat of NG restriction and price escalation to control NATO. That's the name of the game: Control NATO and expand Soviet dominance in Eastern Europe. 

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