Replies to This Discussion

Permalink Reply by dbob on February 5, 2014 at 15:35

Adubu

Someone has to be selling those futures @ $4 and change in the future months - If operators or whoever was selling thought the price was likely to be higher, you would see less supply and higher prices on those futures.  

The macroview is that reduced Bakken/Eagleford/Permian flaring and more completions in the Marcellus are going to put more gas on the market than was there in summer 2013.  Export won't be there to suck it up, coal isn't dead yet and switching based on cost is still an important mechanism to keep a lid on prices.  The signs for the economy are stable, but not aggressive growth.  I think injection season 2014 looks a lot like 2013 or 2012.

Permalink Reply by adubu on February 5, 2014 at 16:28

dbob---future market is on the CBOE and recently has been very volatile today excellent example. Nat gas in about one hour this am spike to high of 5.75 and then about noon back to 5.01 and settled at 5.01 presently in after market trading at $5.13 most of this is Traders making the market not the Operator Producer of the product Nat Gas that are selling and buying It's  the traders scalping to make $$$ rather than trading on fundamentals of supply/demand at the moment. They trade off charts and computers as prices move. The trend of big picture is however driven by is the fundamentals of supply/demand of Nat Gas. Backwardation and contango play roll in market price trends that fall back on the trend of supply/demand---- as you discussed above --- hope this makes sense to you 

Permalink Reply by Joe Aldridge on February 5, 2014 at 17:30

adubu,

I understand that the current NG commodity market is being driven by traders and speculators and not operators. But isn't the price paid for NG established by the future's price at the Henry Hub? If it is not the daily settlement price for NG at the HH why quote it?

Help me here. I'm really confused as to what the real price paid for gas is and how its derived.

Permalink Reply by tc on February 5, 2014 at 18:00

Joe, the futures price we see is the current price to deliver NG at the HH on the closing date of that month's contract.  It is not the daily settlement, that would be the spot price at the HH.  Why the futures prices is quote, is because it more representative of the price of NG, it we used spot prices you could see $100 at the NY city gateway.  Below is a chart from an article dated 1/21/14.  It may not format well, but the article has the chart.  Look at all the spot price ranges.

FUTURES SETTLEMENT NET CHANGE Nymex February $4.431 +10.5c Nymex March $4.358 +9.9c Nymex April $4.179 +9.8c CASH HUB RANGE PREVIOUS DAY El Paso Perm $4.39-$4.4925 $4.285-$4.345 El Paso SJ $4.42-$4.60 $4.31-$4.355 Henry Hub $4.50-$4.65 $4.38-$4.42 Katy $4.45-$4.49 $4.31-$4.34 SoCal $4.59-$4.71 $4.50-$4.55 Tex East M3 $45.00-$95.00 $9.00-$12.50 Transco 65 $4.62-$4.76 $4.415-$4.48 Transco Z6 $85.00-$135.00 $10.00-$25.00 Waha $4.48-$4.50 $4.30-$4.34

Read more: http://www.nasdaq.com/article/storm-sends-natural-gas-prices-for-ny...

Permalink Reply by adubu on February 5, 2014 at 18:07

JA-- sorry to confuse you the CBOE is same as CME since they merged. The futures they trade are the Henry Hub futures on the CME  for price of Nat Gas deliver at HH in La

go to link below live quotes on HH Futures

http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html

Permalink Reply by Joe Aldridge on February 6, 2014 at 1:08

That's the one I've been following. Just could not understand why you guys are talking about the price at HH being driven by Trader and Speculators and not being a real price that Gas is sold for. Thanks for the info.

And tc can you believe that Transco price at NY. I guess that's because of supply at that point. Somebody needs to add another pipeline into that area. Oh, that's right pipelines are bad things. Just can't allow those pipelines to be built.

Permalink Reply by dbob on February 5, 2014 at 8:51

I agree with Jay - if I had a chance to hedge some production, particularly in the summer time, I probably would.  I certainly wouldn't try to hedge April and May - but June through October might look pretty good, particularly if you compare to what they might be able to hedge with 2012 data.  

Permalink Reply by adubu on February 5, 2014 at 15:15

Jay-- I am just talking about the Contango v Backwardation in future markets You knowledge about what the Crack Addicts operators will do and decide on when to drill I yield to your knowledge and opinion 

Permalink Reply by tc on February 5, 2014 at 4:44

January was not the coldest.  In Pittsburgh and Washington D.C. it was only the 4th coldest of the 2000s.

From an earlier post

This Jan. average (22.2 degrees) was not the coldest in Pittsburgh history.  But what may surprise many is that it was only tied for the 3rd coldest in the last 11 years.  2003 & 2009 were colder and this year tied 2004.  I remember the 70s being cold (average for Jan. 28.4), the record was 1977 when the average was 11.4 degrees.  It shows we are better at remembering extremes than averages.

http://www.post-gazette.com/local/region/2014/02/01/January-didn-t-...

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Permalink Reply by adubu on February 5, 2014 at 5:11

Tc--- agree but all depends on where you live-- It's still near record cold --- In Texas it is the coldest this century for coast  and colder than last twenty years + in North East Texas . In Chicago coldest since 1977 ---- Burn the Gas Boys!!!!

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Permalink Reply by Gale on February 5, 2014 at 19:17

Adubu,

AMEN to Burn That Gas Boys!!!

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Permalink Reply by Joe Aldridge on February 13, 2014 at 13:25

In after hours trading for 2/14/14 @ 6:15 pm 2/13/14 the price is: $5.258 and rising.

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