News & Events

02/26/2018: March Natural Gas Futures Tick Higher

February 26th, 2018

NYMEX March natural gas futures rose in short covering overnight leading to the Monday, Feb. 26, open and the contract’s roll off the board at the close of business. At 6:50 a.m. ET (1150 GMT) the contract was 4.7 cents higher at $2.672/MMBtu but by 10:25am ET the contract actually traded lower by 1.5 cents at $2.61.
Although forecasts show average to below-average temperatures expanding in scope across the central and eastern U.S., moderate conditions associated with the calendar suggests limited weather-related demand support.
Updated National Weather Service outlooks show below-average temperatures encompassing nearly the entire West, fringes of the Midwest and a small patch of the Southeast in the six- to 10-day period, before shifting in scope to settle over less but still a majority of the West, slightly more of the Midwest, the lower tier of the mid-Atlantic, all of the Southeast and about half of the Gulf Coast in the eight- to 14-day period.
Average temperatures initially contained to a band along the west-central U.S. and the lower half of the mid-Atlantic into parts of the Southeast eventually scatter to hold over the edges of the Northeast, balance of the mid-Atlantic, much of the Midwest, parts of the Gulf Coast and a few areas of the Southwest. Above-average temperatures dominant in the central and eastern U.S. in the shorter-range view become confined to portions of the Northeast, Michigan, Texas and southern Rockies further out.
“It is the end of the winter heating season and normal to even below normal temperatures this time of the year are not as supportive as they would be in the heart of the season,” Energy Management Institute principal Dominick Chirichella said in a Feb. 23 note to clients.
Should weather implied by the calendar keep demand deflated, the pace of storage erosion will likely remain subdued moving closer to the end of the traditional withdrawal season on March 31.
Lackluster weather-related demand is already seen to have slowed down the rate of storage withdrawals from the 194-Bcf draw in the week ended Feb. 9 to the 124-Bcf pull in the most recent inventory report week ended Feb. 16.
While the latest reported storage drawdown was on the high end of the range of estimates coming into the day and above the 92-Bcf year-ago pull, it was below the closely watched 145-Bcf five-year-average draw. It left total working gas stocks at 1,760 Bcf, or 609 Bcf below the prior-year level and 412 Bcf below the five-year average of 2,172 Bcf.
Another modest storage draw could be in store when the next inventory report that will cover the week to Feb. 23 is released, as the EIA’s latest “Natural Gas Weekly Update” shows warmer weather in the eastern U.S. that drove down natural gas demand in the residential/commercial sector, contributing to a 14% week-on-week decline in total U.S. gas consumption during the week to Feb. 21.
An ongoing slowdown in the rate of weekly stock draws should allow for more natural gas to remain in underground storage than previously expected. Assuming net storage draws matching the five-year average for the balance of the withdrawal season, the EIA sees total natural gas inventories reaching 1,290 Bcf on March 31, which is 24% lower than the five-year average and the second lowest end-of-season level reported since 2010.

2016 Brings Pessimism to Oil and Gas

January 6th, 2016

As 2016 begins, the energy industry remains uncertain of when the oil and gas sector will turn around — and companies are taking steps to streamline operations until prices begin to recover.

That is according to BDO USA, whose annual survey found that 85 percent of U.S. oil and gas chief financial officers (CFO) are predicting low oil and gas prices to be their greatest financial challenge in 2016 — and many energy companies are looking to tighten their belts by selling off assets.

The survey also found that 75 percent of energy CFOs expect M&A activity to rise in the coming year — up from 56 percent last year. Though activity was slower than expected in 2015, deal pace has already started to pick up, with industry giants like Schlumberger and Shell acquiring smaller rivals who have been struggling in this tumultuous pricing environment. Not surprisingly, just under half (49 percent) of CFOs believe undervalued oil and gas assets will be the primary driver of transactions as larger companies and investors home in on struggling companies seeking to shed distressed properties and business units.

The energy sector’s increased pessimism about their ability to access capital and credit may also catalyze deal activity in the months to come. The percentage of CFOs who feel worse about their company’s access to capital has more than doubled — from just 20 percent in 2015 to 45 percent this year. During October 2015’s debt redetermination period, many heavily-indebted exploration and production companies saw reductions in their borrowing bases, which has already produced operational impacts: 45 percent of CFOs experiencing project delays or terminations over the past year cite lack of capital as a leading cause.

“Throughout 2015, we saw many M&A players hesitant to engage in deal activity, likely because sellers hoped the bust cycle would balance out throughout the year and drive valuations up,” said Charles Dewhurst, leader of the Natural Resources practice at BDO. “However, as we enter the New Year, they are letting go of the idea of rapid recovery and may look to sell before valuations bottom out further.”

With debt financing becoming increasingly challenging for energy companies, many are increasing their reliance on private equity to keep afloat. Fifty-five percent of CFOs surveyed say they are likely to utilize private equity as a source of outside capital in the coming year — up from 50 percent last year and 40 percent in 2014.

CFOs are rethinking expenditures and planning to be more conservative in funding new investments as commodities prices continue to hover near record lows. Despite the Obama administration’s decision to permit offshore drilling in the Arctic and Atlantic last year, only 1 percent of CFOs say they will be increasing capital investment in offshore exploration — down from 23 percent in 2015. Meanwhile, the number of CFOs planning to increase investment in non-conventional plays dropped from 47 percent last year to approximately one in three CFOs this year.

In addition to cutting back on investments, oil and gas companies are making tough decisions as contracting prices force them to scrutinize their labor costs. Seventy-one percent of CFOs hope to keep staffing levels consistent with last year, while 9 percent of CFOs say they are likely to reduce their labor force in order to increase profitability, up from 1 percent last year. Those employees who do survive the cuts are likely to personally feel the impact of tightening budgets: Fifty-seven percent of CFOs expect employee bonuses to be smaller for fiscal year 2015.

“Executives must balance the need to bring costs down with the very real risk that a large reduction in labor force may catch them on the back foot when prices begin to climb again,” said Jim Willis, senior director of compensation consulting in the Global Employer Services group and a member of BDO’s Natural Resources practice. “The industry is threading this needle for now by effectively implementing a hiring freeze, but if prices remain low for much longer, more companies may need to seriously evaluate reducing their headcount.”

While commodity price volatility remains front and center, focus on environmental regulation wanes. Given the state of the industry, it’s unsurprising that concerns about environmental compliance risks have lessened considerably, with about one in five CFOs citing it as the primary area of focus for their risk reduction activities compared to 61 percent a year ago. Investments in environmentally friendly exploration and production technologies have also grown less feasible for many companies: Just 22 percent of CFOs plan to increase their investment in this area, down from 35 percent in 2015.



06/04 10:33a CST DJ Natural Gas Rebounds Despite Data Showing Second-Largest Surplus on Record

June 4th, 2015

Natural gas prices dipped, but then rebounded into gains for the day after

federal data showed last week produced the second-highest weekly surplus on



  Analysts and a trader said the market may have bounced from hitting its

one-month intraday low of $2.557 a million British thermal units. The

front-month July contract recently rebounded all the way to gains of 1 cent, or

0.4%, at $2.644/mmBtu on the New York Mercantile Exchange.


  The market has been overwhelmed by bearish traders for months, and the

crowded trade itself has sparked some brief rallies. When a bearish trade gets

crowded, waves of traders often close out at once all trying to protect

themselves against a reversal at seemingly marginal signs of a rebound. That

doesn’t mean the market is fundamentally different, analysts and a trader said.


  “We’re just respecting an old low,” said Dean Hazelcorn, trader at the

brokerage Coquest Inc. in Dallas. “People are not reloading their guns to get



  Data released Thursday suggests the market is oversupplied by about 3 bcf a

day last week, according to analysts’ estimates. The U.S. Energy Information

Administration said storage levels grew by 132 billion cubic feet in the week

ended May 15. That is more than 40% larger than the 92-bcf five-year average

addition for the week and also more than the 123-bcf median average from

forecasters surveyed by The Wall Street Journal.


  The EIA update is widely considered one of the best measures of supply and

demand for the natural-gas market. Gas prices have been too high to convince

power plants to use more of it and absorb near-record supplies, and Memorial

Day also probably cut demand by keeping businesses and schools closed, analysts



  “The market was ready for a large injection, but it’s still extremely

bearish,” said Kent Bayazitoglu, analyst at Gelber & Associates. “We’re not

going to see (a) strong rebound.”


  Last week’s addition brought storage levels to 2.2 trillion cubic feet, 51%

more than a year ago and 1% above the five-year average.









February 25th, 2015

02/25/2015 07:45


    After finishing a relatively quiet day of trade with a modest 2.3-cent gain

at $2.902/MMBtu, March natural gas futures continued in quiet trade overnight

ahead of the Wednesday, Feb. 25, trading session, with the contract’s

expiration at the close. While moving shallowly on either side of the prior

day’s settle in a $2.887/MMBtu to $2.930/MMBtu spread, the front-month was last

eyed stalled at $2.94/MMBtu, up 4 cents.


    Short-covering allowed the contract its modest upside in the prior session

as traders worked to cover positions ahead of the contract’s roll off the

board, with ample amounts of cold weather in forecasts to drive some gains.


    However, weather forecasts for the upcoming six- to 10-day period have been

largely unchanged and the market is running out of steam off of the outlooks

that show below-average temperatures dominating the majority of the country. A

swath of average temperatures will span from the Southeast into a portion of

the Gulf, while another area of average temperatures will span along the coast

of California. Above-average temperatures will be confined to portions of the

Southeast and Gulf.


    Further, in the eight- to 14-day projection, while below-average

temperatures continue to dominate, the intensity of the cold is diminished

across the bulk of the country. While a similar area in the Southeast and Gulf

will see average and below-average temperatures, the area of average

temperatures expands in the West to encompass areas of the Northwest and

Southwest in addition to California. Meanwhile, the California coastal areas

will see above-average temperatures.


    Taking note of the time of year, as winter continues its end-run and spring

gets set to sprint, the market anticipates little threat to the natural gas

supply, and with a healthy end-of-season inventory on tap, continues to find

only modest support for small bursts of short-covering, but no real support for

a sustainable move back above $3/MMBtu.


    The market is nonetheless poised for the midmorning release Thursday, Feb.

26, of U.S. Energy Information Administration storage data that will cover the

week to Feb. 20, when cold weather blanketed major heat-consuming portions of

the country, unleashing demand.


    As a result of the cold that generated 53.7% more heating degree days than

last year and 40.2% more than normal, according to National Oceanic and

Atmospheric Administration data, natural gas storage withdrawals are expected

to ramp-up beginning with this week’s inventory report and possibly extending

into the following week.


    Market participants are expecting pulls ranged from 237 Bcf to 257 Bcf with

consensus formed near a 247-Bcf withdrawal.


    The pull will compare bullish against a 131-Bcf five-year average draw and

the 117-Bcf pull reported for the corresponding week in 2014. At consensus, the

draw would bring natural gas inventories to 1,910 Bcf, reversing the

year-on-five-year-average storage surplus of 58 Bcf left after the 111-Bcf

withdrawal reported by the EIA for the week to Feb. 13, to a deficit of 58 Bcf.


    The data has the potential to move March futures higher in its final day on

the board and could keep support under the soon-to-be lead April contract, with

its bullish comparisons and the implication of a tightening supply/demand



    “So far the market has been quite tolerant, even complacent regarding both

the current cold snap itself and its likely impact on storage levels, but we

continue to see potential for a short covering rally to $3.20 or more over the

next few weeks,” Citi Futures analyst Tim Evans said.


    Still, natural gas inventories currently stand at 2,157 Bcf, 678 Bcf above

the year-ago level, and are on track to end the season well above the 822 Bcf

left in storage at the end of 2013-2014 winter heating season.


    With eyes shifting to April futures, the contract closed out the prior

session down 0.4 cent at $2.889/MMBtu and extended losses overnight. Finding a

$2.866/MMBtu to $2.911/MMBtu range, the contract was last down 1.2 cents at



    In spot trade, cold weather lost its impact on the markets as slight trends

toward warming will equate to lower demand.


NG today.png


January 2015 Gas Tumbles as Inventories Remain on Track

December 23rd, 2014

NG today.png


Following a sharp 17.8-cent decline ahead of the weekend to a settle at

$3.464/MMBtu, January 2015 natural gas futures continued to unwind overnight

ahead of the Monday, Dec. 22, open, as the anticipation of a healthy

end-of-season storage level continued to weigh on values, despite colder

weather forecasts suggesting stronger demand and an increased pace of storage

erosion. Sending the entire overnight session in negative territory, the

contract moved from $3.45/MMBtu to $3.12/MMBtu and was last down an

impressive 33 cents to $3.12/MMBtu, a level not seen since August 2013.


    According to the National Weather Service, below-average temperatures will

dominate the bulk of the country in the upcoming six- to 10-day period to

encompass most of the West, the whole central U.S. and much of the East, from a

majority of the Mid-Atlantic on to the Southeast. Average temperatures are

expected to linger over a few parts of the Southwest, Northeast and

Mid-Atlantic, while above-average temperatures are forecast to be confined to

about two-thirds of the Northeast and portions of the Pacific.


    Below-average temperatures are seen spreading to engulf more of the East

further out to the eight- to 14-day period, as above-average temperatures

shrink in scope to be contained over parts of the Pacific. Average temperatures

are called only for Maine, southern Florida and a narrow stretch of the



    While widespread below-average temperatures in forecasts are expected to

generate increased demand for heating that would heighten the rate of weekly

storage withdrawals going forward, relatively milder conditions than last year

and ongoing robust production should help keep the pace of storage erosion

lackluster compared to historical averages.


    “More moderate temperatures in 2014 are supporting the decrease in

consumption; heating degree days since the start of November have been 7.2%

lower in 2014 compared to 2013,” the U.S. Energy Information Administration

said in its latest “Natural Gas Weekly Update.” Consumption of natural gas

since Nov. 1 has averaged 78.1 Bcf/d, down from 83.0 Bcf/d during the

corresponding period last year.


    The EIA sees natural gas consumption remaining subdued relative to the

prior-year level through the balance of the winter amid near-average

temperature outlooks this season. “However, even if the rest of the winter

matches last winter in severity, it is unlikely that storage inventories would

drop as low as they did at the end of last winter because of the gains in

production,” the agency said.


    Although rig counts are falling, with the latest data from Baker Hughes

Inc. showing that total U.S. rig count dropped 18 since the week ended Dec. 12

due to a loss of 10 oil rigs and eight natural gas rigs, the count remains 107

higher than at the same time last year.


    Additionally, the EIA said that in the past several weeks, natural gas

production levels have reached record highs, with dry gas output averaging 70.8

Bcf/d since Nov. 1, which represents an increase of 4.8 Bcf/d over the same

period in 2013.


    The EIA calls for an end-of-March 2015 natural gas inventory of 1,431 Bcf,

significantly higher than the 2014 end-of-March storage levels, which were at

an 11-year low of 857 Bcf, according to agency data. Working natural gas in

storage has already surpassed the year-ago level, after a 64-Bcf withdrawal

reported for the week to Dec. 12 took inventories to 3,295 Bcf, generating a

6-Bcf surplus to the prior-year figure which was impacted by frigid cold that

prompted a surge in demand and sharp reduction in the natural gas supply.

Compared to the five-year average of 3,553 Bcf, a 258-Bcf deficit remains.




Market Commentary 12-08-2014

December 8th, 2014

12/08/2014 07:29 SNL: January 2015 gas futures retrace lower as fundamentals

remain bearish


    After rebounding 15.3 cents ahead of the weekend to a finish at

$3.802/MMBtu, January 2015 natural gas futures returned to the downside

overnight ahead of the Monday, Dec. 8, open amid persistent fundamental

weakness, as weather outlooks continue to reflect a warming trend expected to

diminish demand and allow for additional unimpressive storage withdrawals.

Moving from $3.711/MMBtu to $3.787/MMBtu, the front-month was last eyed 12.7

cents down at $3.67/MMBtu.


    Following a 162-Bcf drawdown in the week to Nov. 21 that marked the first

triple-digit pull of the 2014/2015 withdrawal season, the rate of storage

erosion slowed when the U.S. Energy Information Administration reported a

smaller-than-expected and significantly below-average 22-Bcf draw from stocks

for the week to Nov. 28.


    The latest pull from storage was only half of SNL Energy’s final survey

average calling for a 44-Bcf draw and was significantly bearish relative to the

141-Bcf drawdown seen in the corresponding week in 2013 and the 50-Bcf

five-year-average withdrawal.


    The reported storage withdrawal took overall natural gas inventories to

3,410 Bcf, narrowing deficits to 227 Bcf versus the same time in 2013 and 372

Bcf compared to the five-year average of 3,782 Bcf.


    Market participants anticipate a continuation of lackluster storage

withdrawals when the EIA releases its next weekly inventory report on Thursday,

Dec. 11.


    While natural gas demand ticked higher in the week ended Dec. 3, according

to the EIA’s latest “Natural Gas Weekly Update,” production remained robust,

thereby likely to have offset the amount of natural gas drawn from underground

storage facilities.


    Total U.S. natural gas demand climbed 3.1% during the report period, as

consumption increased across all demand sectors save for the power sector.

Residential/commercial-sector demand rose 6.7% week over week, as

industrial-sector demand was lifted 1.1% and U.S. gas exports to Mexico

increased 8%. Conversely, power burn fell 2.2% from the week-ago level.


    Meanwhile, total U.S. gas supply gained 1.4% week on week, primarily due to

ongoing strong production. Dry natural gas production ultimately ended the

report period 1.6% higher than in the prior week, with output levels seen

reaching a single-day record Dec. 2 as it exceeded 71.8 Bcf, and holding on to

above 71 Bcf/d during each day of the review week.


    An early survey of traders and analysts shows the expected pulls ranging

from 48 Bcf to 53 Bcf for the week to Dec. 5, which will compare against a

92-Bcf draw in the corresponding week in 2013.


    Combined with ongoing strong production, the slowdown in storage erosion

should allow for overall natural gas supply to remain on track toward a healthy

end-of-March level, especially as weather projections continue to signal

subdued demand in the weeks ahead.


    Revised forecast maps from the National Weather Service continue to show

the prevalence of above-average temperatures throughout the country in the

upcoming six- to 10-day period, spanning the entire West all the way through

the bulk of the East, leaving only the South Atlantic to see average to

below-average temperatures.


    Below-average temperatures hold over Florida and average temperatures

across portions of the South Atlantic spill on to a few areas of the

south-central U.S. further out to the eight- to 14-day period, but the balance

of the country is still expected to remain in the grip of above-average



Market Commentary with NG Chart

December 5th, 2014

NEW YORK–Natural gas snapped a six-session losing streak Friday but held

near recent lows on expectations that above-average temperatures would limit

demand for the heating fuel.


 Natural gas for January delivery rose 7 cents, to $3.72 a

million British thermal units on the New York Mercantile Exchange.


Prices have slumped this week as forecasts called for warmer-than-normal

temperatures. Winter is typically the strongest season for natural-gas demand,

as half of U.S. households use gas as their primary heating fuel.


Weather forecasts were little changed Friday. But the coldest weather often

comes in January and February, leaving traders hesitant to bet on larger price

declines before seeing how the rest of the winter will shape up, said Teri

Viswanath, director of commodity strategy for natural gas at BNP Paribas SA, in

a note.


“Given just how far prices have fallen in a relatively compressed period of

time, it appears that traders are beginning to question further declines,” Ms.

Viswanath said. “Without verification of continued mild weather in January, it

appears that the sell-off has momentarily stalled.”


Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana

recently traded at $3.4175/mmBtu, according to Intercontinental Exchange Inc.,

versus Thursday’s average of $3.5478/mmBtu.


Natural gas for next-day delivery at Transcontinental Zone 6 in New York

traded between $3.15 and $3.50/mmBtu, compared with $3.5345/mmBtu Thursday.

NG today

Natural Gas Extends Slide, Approaches Bear Market Territory

December 5th, 2014

Natural gas futures tumbled to a new one-month low on Thursday after U.S. data showed domestic demand was about half of what was expected last week and as weather forecasts dampened the outlook for gas-fired heating demand.

Natural gas for January delivery settled down 15.6 cents, or 4.1%, at $3.649 a million British thermal units, the lowest since Oct. 28. on the New York Mercantile Exchange. It was the sixth straight losing session for the market, with prices now approaching bear market territory, defined as a fall of 20% or more from a recent peak. Prices are down nearly 19% from $4.489 a million Btus reached on Nov. 20.

The surging volatility in the natural gas market has closely followed the extreme weather pattern in the U.S. in recent months, with a colder-than-average November followed by projections for a warmer-than-average December. At this rate, giving surging domestic gas production and weak demand as the market enters a period of normally peak usage, the U.S. could erase its supply deficit within weeks.

“This weather is unusual,” said Teri Viswanath, natural gas strategist at BNP Paribas in New York. “As cold as it was in November, it’s as mild or warm in December.”

In weekly data reported by the U.S. Energy Information Administration, domestic natural gas inventories fell by 22 billion cubic feet in the week ended Nov. 28, compared with an expected decline of 43 bcf, according to the average estimate of analysts surveyed by The Wall Street Journal. Total inventories now stand at 3.4 trillion cubic feet, 9.8% below the five-year average. Last winter’s severe cold drained stockpiles to an 11-year low.

Heating demand doesn’t look set to recover soon. New forecasts called for a series of mostly above-average temperatures over most of the U.S. in the next two weeks, with a huge swath of much-above-average warmth over the Midwest as late as Dec. 18—normally one of the coldest regions of the country and a strong driver of gas-fired heating demand.

“Additional (price) declines are certainly possible should the current mild temperatures views extend through the upcoming weekend,” research consultancy Ritterbusch & Associates said in a note.



Weekly Natural Gas Storage Report

September 11th, 2014

U.S. natural-gas inventories rose 92 billion cubic feet on the week
ended Sept. 5, the Energy Information Administration said Thursday. That
contrasted with expectations of an increase around 82 bcf and 85 bcf, according
to polls by Thomson Reuters and Bloomberg News. The increase was likely to
pressure natural-gas futures prices, because it not only topped market
expectations but also was 31 bcf more than the five-year average increase for
the week, said Tim Evans, an analyst with Citi Futures. “As it’s unclear
how much demand may have been lost due to the Labor Day holiday, it’s hard to
know how much the build represents a possible increase in underlying supply
that would carry over into future flows,” he added. Natural gas for
October delivery NGV14, -3.41%declined 12
cents, or 3.2%, to $3.83 per million British thermal units on the New York
Mercantile Exchange.

Working gas in storage was 2,801 Bcf as of Friday, September 5, 2014, according to EIA estimates. This represents a net increase of 92 Bcf from the previous week. Stocks were 443 Bcf less than last year at this time and 463 Bcf below the 5-year average of 3,264 Bcf. In the East Region, stocks were 215 Bcf below the 5-year average following net injections of 60 Bcf. Stocks in the Producing Region were 211 Bcf below the 5-year average of 1,052 Bcf after a net injection of 20 Bcf. Stocks in the West Region were 38 Bcf below the 5-year average after a net addition of 12 Bcf. At 2,801 Bcf, total working gas is below the 5-year historical range.

Market Commentary

August 13th, 2014
ERCOT Cash – more of the same – normal temps, built for more…
PJM Cash – a story of the Led Zeppelin vs. Poison – 70s in the West and 80s in the East – flows moving towards the Glam Rock in Baltimore.
ERCOT Forwards – lots of quoting across many parts of the curve – but only bits and pieces traded – Cals slightly up 11.57, 11.61, and 11.62 – Cal 15, 16, 17 respectively.
PJM Forwards – lower on …demand I guess and lack of any fearful events…
NG – lower today on little news – I guess demand doesn’t appear to be AS strong next week – whatever. I think the $4.00 thing weighed down on the bulls overnight – AND!!!! Tomorrow is BDOW (Best Day of Week).
EIA DAY – expected mid 80s (like when Bryan Adams was popular), Last year Beach Boys – 65 Bcf build. 5 year average – Big Band and Swing, 47Bcf.
CL – Higher today. Up on a storage build, huh? Profit taking?
Economy and Stocks – up today on no new geo-politic tensions, United Airlines fuel costs being lower and flat retail sales – really up on nothing. The headline on banks pulling back on “REPO” (repurchase agreements) loans isn’t warming to me….
BITCOIN – $537 – ouch down 50 smackers overnight – apparently Consumer Financial Protection Bureau made new warnings about the digital currency – according to
NG – $3.815
Crude – $97.34
SP500 – 1946.72
US 10-Yr – 2.444
Gold – 1313.70
**near market close