Capstone Energy Services


US Gas Futures Snap Four-Day Rally Streak

July 15th, 2011

NEW YORK (Dow Jones) – A larger-than-expected weekly increase of U.S. inventories pushed natural-gas futures lower Thursday, but futures pared those losses on continued forecasts for hot weather.

Natural gas for August delivery settled down 2.5 cents, or 0.6%, at $4.378 a million British thermal units on the New York Mercantile Exchange.

The Energy Information Administration said U.S. natural-gas stockpiles rose by 84 billion cubic feet last week, above the 76-bcf predicted by analysts surveyed by Dow Jones Newswires.

The benchmark contract began the session down about 5 cents, but continued its decline after the data release to reach an intraday low of $4.252/MMBtu.

This is the second-consecutive week of a larger-than-expected injection, though warmer weather led some analysts to expect smaller builds.

“People are starting to reassess end-of-season storage expectations,” said Cameron Horwitz, an analyst with Canaccord Genuity in Houston.

The market is seeing elevated levels of natural-gas supply, and inventories are forecast to surpass 3.8 trillion cubic feet at the end of October, the EIA said Tuesday.

A milder summer for 2011 is expected to contribute to the large size of the end-of-season inventory. Demand for natural gas tends to fluctuate with warmer weather in the summer as it is used to generate electricity to power air conditioners.

“We could see triple-digit injections in the back half of summer” if temperatures return to normal, Horwitz said.

The injection for next week is already expected to be lower due to the heat wave now affecting the country.

The East saw some relief from the heat Thursday, but futures erased some losses later in the session as weather reports still show heat sticking around the central part of the U.S.

Extreme heat is expected to “dominate” the Midwest for much of the six- to 10-day forecast, MDA EarthSat Weather said.

Hot-temperature forecasts extending to the end of July are providing most of the support for futures prices, said Jim Ritterbusch, head of trading advisory firm Ritterbusch & Associates, in a client note.

Prices are anticipated to have support at $4.25 and could move up toward $4.50, Ritterbusch wrote.


By Amy D’Onofrio

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.


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