Suez Weekly Market Monitor
ERCOT power prices stayed constant until the middle of the week where they increased slightly. At the end of the week, prices decreased somewhat as they reacted to the declining natural gas market.
Northeast power prices increased steadily throughout the week.
PJM power prices stabilized in the early week and saw gains a few days later leading prices to close a few points above the previous week.
Natural Gas Market
Natural gas prices started the week at a steady pace before increasing slightly at the end of the week.
Natural Gas Storage: Gas in Storage Decreased 224 Bcf
Working gas in storage was 2,347 Bcf as of Friday, February 2, 2007, according to EIA estimates.
Nymex Natural Gas Declines on Ample Supplies, Milder Weather
Natural gas fell in New York amid abundant supplies of the furnace fuel and forecasts showing a return to more seasonal temperatures next week.
U.S. utilities, manufacturers and power stations held 2.347 trillion cubic feet of gas in underground storage caverns as of Feb. 2, 19 percent higher than the five-year average, the government said. Meteorologists predicted higher temperatures next week across sections of the central U.S. after a month of frigid weather in the heating fuel's biggest markets.
“The weather forecasts are showing a break in the cold weather,” said Chris Jarvis, energy analyst at consultant Caprock Risk Management in Hampton Falls, New Hampshire. “If we get this warm spell, then natural gas will have trouble holding even these levels here.”
Gas for March delivery dropped 37.8 cents, or 4.8 percent, to $7.449 per million British thermal units at 10:06 a.m. on the New York Mercantile Exchange. The price has climbed 13 percent in the past month.
“A warm-up next week is now for real,” said Joe Bastardi, lead meteorologist at Accu-Weather Inc. in State College, Pennsylvania. Bastardi predicted the cold that has gripped the central and eastern U.S. since the middle of last month.
Meteorologists at MDA EarthSat Energy Weather said the central U.S. will return to normal temperatures during the Feb. 17 through Feb. 21 period, with below-average readings lingering across the eastern third of the country. Above-average temperatures will reach across the entire eastern half of the nation from Feb. 22 through 26, MDA said.
“One last push of colder air is seen into the Midwest and East this coming holiday weekend before a major thaw commences,” MDA's lead meteorologist Matt Rogers said in today's report.
Technical Factors :
Technical factors also helped fuel today's decline, analysts said. Technical analysts study price charts and volume graphs to glean clues to how trading might flow in the future.
Natural gas failed on at least two attempts to rally past the $8.035 two-month high from Feb. 5, a bearish signal, said Wendell Tucker, a broker at Capitol Commodity Services in Indianapolis.
“They tried to run it up last week,” Tucker said. “It just stalled out.”
Benchmark gas climbed 4.7 percent last week. The increase in prices would normally be a bullish indicator, assuming it showed people buying gas contracts and holding them. The fact that open interest was declining at the same time prices were going up, however, shows that people were exiting the market as they were buying contracts, Jarvis said. That happens with traders holding short positions, or bets for a decline, he said.
Traders holding short positions have to buy gas to close out their position. Open interest is the total number of option and futures contracts that have not been closed, liquidated, or delivered.
“When you see prices going up, you want to see that confirmed by rising open interest,” Jarvis said.
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January 19th, 2018
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