Going Up

April 8, 2014

As reported in eia.gov

First the report:

  • Natural gas working inventories on March 28, 2014, were 0.82 trillion cubic feet (Tcf), 0.88Tcf (52%) below the level at the same time a year ago and 0.99Tcf(55%) below the five-year average (2009-13).  Henry Hub natural gas spot prices were volatile over the past few months, increasing from $3.95 per million British thermal units (MMBtu) on January 10 to a high of $8.15/MMBtu on February 10, before falling back to $4.61/MMBtu on February 27, and then bouncing back up to $7.98/MMBtu on March 4.  EIA expects that the Henry Hub natural gas spot price, which averaged $3.73/MMBtu in 2013, will average $4.44/MMBtu in 2014 and $4.11/MMBtu in 2015.

Bottom Line:


Natural gas prices are going up for foreseeable future. Reserves are down, they have to be replenished. The summer forecast is casting a shadow. Should they be looking at a warming trend with hotter temperatures during the summer months that will also prevent gas prices from dropping; since 30% of electricity is generated with natural gas.

Scratching My Head

April 3, 2014

What goes up!!!



Must go somewhere…




For it surely isn’t…



Coming down




It seems the natural gas market


Has taken on


A life of its’ own



You have probably


Seen me write about…


The plight of the nymex




The nymex is where gas is traded



It represents


Gas out of the ground




In mid-December



The nymex was trading



In the mid $3 range


Per Dekatherm




(A dekatherm is 10 therms….



We buy gas in bulk!!!)




When the cold weather


Bolted upon us




The nymex shot up


Into the $5 to $6 range




This is something


We regularly discuss with our clients



It is during the winter months


From November thru March



People use the most gas




And because of the increased demand



The market can be volatile




It is important to price protect yourself


During this time period




The nymex



Has slowly been making


Its’ way back down




As of this writing


The nymex is trading



At $4.45 a dekatherm





Still higher than December





Will it go back under $4?





That remains to be seen





Market trends are…




An ongoing conversation


In this business




Similar to breathing





The second equation


That makes up


Natural gas prices




Is the Basis



(Transportation Cost)




How do you get the…



Gas out of the ground



To the local provider


ie: PSEG, SJ Gas Peco etc.





This is where things


Get tricky




Over the past 10 years


The basis price


Ran around….



$2 – $3 a dekatherm





Over the last year




Basis prices dropped


To an all-time low




In the past…


Gas was coming from


The Gulf of Mexico..




Now with new technology…




They are pulling gas


From Pennsylvania and New York





As a result




We have seen


Basis prices








That was until the cold weather hit


In January




Over a 2 day period



Basis went from….



Below $2 a dekatherm




To $11 a dekatrherm




And then leaped to over



$20 a dekatherm



The next day




We were in unchartered waters




Basis has slowly been making


Its way back down




But it hasn’t recovered


As quickly as


The nymex




The Basis market is


Still spooked by the



Polar Vortex





Currently the Basis price is trading




In the $7 range




That is still


Way too high




Maybe the basis pricer uppers




Do not realize that…




Winter is over





Don’t any of their kids playing….








Spring is here





The snow is gone





Let’s get back to




Market reality!!!!








Could this be the…




New reality






Stay tuned




We’ll keep you posted


To learn more email george@hbsadvantage.com


                                         Smart Solutions for Smart Business