Natural gas falls; supply down less than expected ( NGJ13 ) by Myra P. Saefong
SAN FRANCISCO (MarketWatch) -- Natural-gas futures turned lower Thursday, after the Energy Information Administration reported a decline in U.S. inventories that was smaller than expected. Supplies fell 62 billion cubic feet for the week ended March 15, the EIA said. Analysts polled by Platts forecast a decline between 67 billion cubic feet and 71 billion. Total stocks now stand at 1.876 trillion cubic feet, down 502 billion cubic feet from the year-ago level and 162 billion cubic feet above the five-year average, the government said. April natural gas (ngj13) was at $3.94 per million British thermal units, down 2 cents, or 0.6%. It was trading at $3.98 shortly before the data.
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After this next drawn down, I bet we clear $4. Factor in all the late winter weather and we may see $4.25. That would be GREAT
There is not enough demand to support any robust production...these price are likely here to stay....
Since NG is presently at $3.945 for April (on 3-24-13) (and per the relatively chilly winter that's now sweeping into spring . . . and per the near-term weather models and per the whiff of some bullish sentiment basing and building (it seems) . . .
$4 might happen before the April NG contract settles on March 26th. If it does, then that would reinforce the bull move up (a bit). And if it does not, then $3.95 is close enough for certain folks (if that price holds until the Tuesday settlement this week).
Now, the real question is: "How long will it stay at $4 or above?"
The futures market is presently betting on the $4 price sticking, beginning with the June 2013 contract, and then staying above $4 into the foreseeable future until Dec 2021 . . . when it'll be flirting with $6. See below chart and/or click on the CME Group Henry Hub
Of course, such NG predictors are speculative models which have been known to be wrong before, since a bear market can roar in and reshuffle the bets at anytime.
But still, there is a reasonable set of odds that the NG bull will run for a decent cycle (we can only hope).
Also, the term "bull" for $4 NG is a bit of a misnomer (in and of itself) . . . since not that many years ago, a bull uptick got royalty owners' attention when it moved into the $6 range. $8 was good stuff, too. Then there was that wild ride over $13 -- the herd of feral bulls -- in 2008 which really set folks up for the big fall we experienced when NG dropped down below $2 last year. As many on GHS know, that bear turn did great damage.
Anyway, if NG can hold at around $3.80 (and up) through the summer until next winter kicks in; then hopefully the bear won't come a callin' for all of 2013 (if you call below $3 a bear.)
Finally, in regards to new HA wells . . . it appears certain operators are sorta cherry picking their new drilling locations if they can edge in a profit to make it worth their investment in their HBP portfolios. So it kinda seems that the HA drilling bottom . . . has truly bottomed and that there appears to be a fractional tick up in a few "select" locations, but not enough, as of yet, to generate much of a rig count stat, although the rig numbers might be turning up soon.
And knowing the players, if a few operators smell money to be made on HA HBP with new rapid multiple wells in a section, then others might soon jump in and join the bandwagon, unless their commitments to other plays, along with no cap to pull the trigger, hobbles them to wait.
Hey, those Aussies seem to be spudding for a ramped-up return on their HK investment, eh?
I'm sure we all know some folks who'd like 3 or 4 new super wells (over a number of sections) within the next the year.
Lastly, don't start drinking the Kool-Aid until the landmen start knocking on doors on the unproven HA fringes where step-out satellite wells have staked iffy claims.
Henry Hub Natural Gas Futures
Charts | Last | Change | Prior Settle |
Open | High | Low | Volume | Hi / Lo Limit |
Updated | ||
---|---|---|---|---|---|---|---|---|---|---|---|
Apr 2013 | 3.945 | +0.018 | 3.927 | 3.943 | 3.955 | 3.930 | 1,007 | 5.427 2.427 |
12:09:05 AM CT 3/25/2013 |
||
May 2013 | 3.964 | +0.012 | 3.952 | 3.964 | 3.979 | 3.957 | 1,268 | 5.452 2.452 |
12:09:04 AM CT 3/25/2013 |
||
Jun 2013 | 4.008 | +0.015 | 3.993 | 4.000 | 4.020 | 4.000 | 339 | 5.493 2.493 |
12:03:54 AM CT 3/25/2013 |
||
Jul 2013 | 4.066 | +0.028 | 4.038 | 4.048 | 4.066 | 4.048 | 87 | 5.538 2.538 |
12:09:01 AM CT 3/25/2013 |
||
Aug 2013 | 4.074 b | +0.019 | 4.055 | - | 4.074 b | - | 39 | 5.555 2.555 |
12:09:04 AM CT 3/25/2013 |
||
Sep 2013 | 4.059 b | +0.011 | 4.048 | - | 4.059 b | - | 6 | 5.548 2.548 |
12:03:54 AM CT 3/25/2013 |
||
Oct 2013 | 4.075 b | +0.018 | 4.057 | - | 4.075 b | - | 78 | 5.557 2.557 |
12:09:04 AM CT 3/25/2013 |
||
Nov 2013 | 4.147 b | +0.019 | 4.128 | 4.143 | 4.147 b | 4.143 | 13 | 5.628 2.628 |
12:07:26 AM CT 3/25/2013 |
||
Dec 2013 | 4.296 b | +0.018 | 4.278 | - | 4.296 b | - | 25 | 5.778 2.778 |
12:07:26 AM CT 3/25/2013 |
||
Jan 2014 | 4.375 | +0.017 | 4.358 | 4.375 | 4.384 | 4.375 | 77 | 5.858 2.858 |
12:09:04 AM CT 3/25/2013 |
||
Feb 2014 | 4.351 b | +0.016 | 4.335 | - | 4.351 b | - | 0 | 5.835 2.835 |
10:45:25 PM CT 3/24/2013 |
||
Mar 2014 | 4.285 b | +0.015 | 4.270 | - | 4.285 b | - | 1 | 5.770 2.770 |
10:45:32 PM CT 3/24/2013 |
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