Capstone Energy Services


US Gas Futures End Higher As Traders Weigh Weather Outlook

February 21st, 2011

NEW YORK (Dow Jones) – Natural-gas futures ended slightly higher Friday as market participants were reluctant to bet that prices would fall with forecasts pointing toward colder-than-normal weather at the end of the month.

Natural gas for March delivery settled 0.8 cent, or 0.2% higher, at $3.876 a million British thermal units on the New York Mercantile Exchange. On the week, the benchmark contract shed 3.4 cents, or 0.9%.

“There’s a little bit of uncertainty,” said Cameron Horwitz, a Houston-based analyst with Canaccord Genuity. “People don’t want to take it too low in case there’s another bout of arctic air.”

Colder-than-normal temperatures should cover much of the northern tier of the country beginning next week and lasting through the beginning of March, meteorologists with private forecaster WSI Corp. said. Warmer-than-normal weather is expected during the period in the Southeast.

Forecasting models haven’t settled on the intensity of the chill expected during the first week of March, WSI meteorologists said.

With the coldest of winter’s chill likely past, market participants have been closely watching forecasts to try to gauge likely demand for the heating and power-plant fuel. Futures sank by more than 9% last week as forecasts turned warmer.

Meanwhile, the number of rigs drilling for natural gas in the U.S. fell by one this week, to 905, according to oil-field services company Baker Hughes Inc. (BHI). The count has declined for three consecutive weeks, but is still at a level that analysts have said will lead to continued production growth.

Despite large withdrawals from gas inventories amid a bitterly cold winter, many market participants still see supply outpacing demand in 2011.

As of Feb. 11, U.S. inventories stood at 1.911 trillion cubic feet, 6.3% below the five-year average, and 6.9% lower than the same time last year, the Energy Information Administration said last week. That is a sharp reversal from the start of winter, when supplies bloated to near record levels almost 10% above the five-year average.

Nymex floor trading is closed Monday for the Presidents’ Day holiday.

FUTURES                   SETTLEMENT                   NET CHANGE
Nymex March                $3.876                                  +0.8c
Nymex April                   $3.906                                  +0.5c
Nymex May                   $3.976                                  +0.8c

CASH HUB                       RANGE                            PREVIOUS DAY
Henry Hub                     $3.79-$3.89                         $3.80-$3.95
Transco 65                     $3.78-$3.85                         $3.80-$3.82
Tex East M3                   $4.10-$4.40                          $4.12-$4.19
Transco Z6                     $4.95-$5.30                          $4.40-$4.55
SoCal                              $3.85-$3.87                          $3.88-$3.93
El Paso Perm                 $3.72-$3.77                          $3.72-$3.80
El Paso SJ                      $3.72-$3.76                           $3.70-$3.79
Waha                              $3.70-$3.80                           $3.74-$3.80
Katy                                $3.74-$3.80                            $3.79-$3.86


By Matt Day

Energy Facts

Energy Facts

Natural gas can be used as a raw material in a variety of products, including paint, fertilizer, plastics and medicines.

Natural gas produces fewer emissions than other fossil fuels, with less nitrogen, sulfur, carbon and fine particulates.

Texas produces the largest amount of natural gas in the USA.

The biggest consumer of coal in the US is the electric power sector.

There are 17,658 electric utility generators in the USA.

Energy Delivery Chains

Energy Delivery Chains

Find out more about how your energy is produced and delivered to your business.

Learn More

Energy & the Environment

Energy & the Environment

How we assist clients in responding to national environmental concerns.

  • Initiate and manage a "Green" energy procurement program
  • Evaluate national legislative and regulatory initiatives
  • Research state and local energy efficiency programs and incentives
  • Track energy use and related emissions estimate