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US Gas Prices Slip From Monday’s 10-Month High

June 8th, 2011

NEW YORK (Dow Jones) – Natural gas futures prices were modestly lower Tuesday, with traders reassessing the near-term market after a sharp rise to 10-month highs on Monday.

Buying interest also cooled as the National Hurricane Center downgraded the chances that a weather disturbance in the Caribbean Sea could develop into a tropical cyclone in the next 48 hours. Forecasters said there is a “low chance”
of that occurring, down from a 50% chance on Monday.

“The fundamentally bearish folks’ heads are spinning here. There is plenty of natural gas, shale gas is being produced at a record pace and industrial baseload is its lowest in years,” said Peter Beutel, president of Cameron Hanover.

Still, lingering above-normal temperatures in the central and eastern states may keep prices from dropping much, but may not be enough to encourage a further rally.

“We don’t see summer heat, nuclear outages, or hurricane risk as reliable intermediate-term supports for natural gas prices,” said Tim Evans, analyst at CitiFutures Perspective.

Natural gas for July delivery on the New York Mercantile Exchange was down 1.5 cents at $4.812 a million British thermal units. On Monday, the contract surged 12 cents to the highest end of day price since July 2010, part of a 14%
rally since May 20.

Meantime, natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at 4.83/MMBtu, down 1 cent from Monday’s average. Next-day gas for delivery at Transcontinental Zone 6 in New York traded at $6.25/MMBtu, up from $5.34/MMBtu a day earlier.

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By David Bird

Glossary Terms

Glossary Terms

Nominated Volume

The physical quantity of gas requested, typically in MMBtu/day, for a specific contract or for all contracts at a specific point.

Marketing Affiliate

A marketing company that has corporate ties to an interstate pipeline, an intrastate pipeline, or a local distribution company.

Energy Only Providers

Power marketers or other electricity vendors who provide and bill for only the energy component of the electricity consumed by the end-use customer.

Therm

A unit of heating value equivalent to 100,000 British thermal units (Btu).

Real Power

The component of electric power that performs work, typically measured in kilowatts (kW) or megawatts (MW)--sometimes referred to as Active Power.

Injection (Storage)

The process of delivering natural gas into a storage field for future delivery and use.

Price Ceiling

Statutory maximum lawful prices for various categories of natural gas, including gas destined for both the intrastate and interstate markets.

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Energy Delivery Chains

Energy Delivery Chains

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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