Energy / Natural Gas

• Natural Gas Analysis for the Week of August 15, 2011

  October natural gas futures bucked the trend of most commodity markets last week by posting a strong 2.75% gain to finish at 4.071. Technically the market posted a weekly closing price reversal bottom. A follow-through rally through 4.159 will be needed to confirm the bottom at 3.876. Based on the short-term range of 4.600 to 3.876, the first upside target is a retracement zone at 4.238 to 4.323. Downtrending Gann angles at 4.2100 and 4.2800 could also prove to be strong resistance. The main trend is down on the weekly chart. A trade through 4.600 will turn the main trend…

• Ukraine to cut Gazprom's umbilical cord?

  Sometimes it's not easy being Russia's neighbor - just ask Ukraine. Ever since the 1991 implosion of the USSR, Ukraine's relations with Russia have appeared between coldly formal and outright hostility, with a major irritant being the increasingly high prices Gazprom charges for natural gas.  Gazprom in turn needs access to Ukraine’s pipeline network in order to reach its profitable European customers. Faced with this symbiotic relationship, Kiev has been assiduously looking for ways to break out of its dependency on Russian energy imports, and now it looks as if this may in fact be coming true. The head of Ukraine’s…

• Canada's Increasing Demand for U.S. Natural Gas

  Canada needs US natural gas to help produce its bitumen oil sands. As oil sands production ratchets up from 1.5 million barrels per day to 5 mbpd by 2020, Canada's demand for US gas should continue to rise. The emergence of shale gas over the last six years has fueled our hopes that we'll be able to safely transition away from our oil addiction. Not only do we have an abundance of it trapped in the various shale formations across our country, but developing that resource is inevitable, because we're not the only ones counting on that future supply... You…

• Natural Gas Analysis for the Week of August 8, 2011

  Nearby Natural Gas futures fell sharply lower last week, briefly piercing the low for the year at 3.917 while reaching 3.901 before settling the week at 3.941. The poor outlook for the U.S. economy was the main reason for the weakness. Traders pushed prices lower as supply continued to grow and expectations for a drop in demand continued to grow. Although the market has reached a perceived extreme low, there doesn’t appear to be any panic selling or capitulation. This typically means the market is being driven by the true forces of supply and demand rather than aggressive speculation. Over…

• Natural Gas Analysis for the Week of August 1, 2011

  September Natural Gas futures prices fell close to 6.0% last week and closed in a position to challenge the early July bottom at 4.067 and a pair of major bottoms at 4.012. An easing of the hot temperatures that have plagued the Eastern U.S. for most of July and a drop in second quarter GDP were responsible for most of last week’s sell-off. While these two factors took care of the demand side of the equation, news that of a larger-than-expected injection took care of the supply side. Weather is likely to have the biggest influence on this market over…

• The Growth of the Natural Gas Industry

  The natural gas industry in the United States has undergone significant changes in the last twenty years. As I noted last time, until 1993 the industry was beset by regulation that controlled both price and flows. With the removal of those regulations the industry was able to make considerable strides to increase market share. As it became able to do so, the problems perceived from the burning of coal in particular as a power plant fuel, led to moves to increase the amount of electricity that is produced using natural gas. By 2009 the installed capacity to generate electricity included…

• Shale Gas Changing the Energy Balance of Power

  Rising U.S. natural gas production from shale formations has already played a critical role in weakening Russia's ability to wield an "energy weapon" over its European customers, and this trend will accelerate in the coming decades, according to a new Baker Institute study, "Shale Gas and U.S. National Security." The study, funded by the U.S. Department of Energy, projects that Russia's natural gas market share in Western Europe will decline to as little as 13 percent by 2040, down from 27 percent in 2009. The Baker Institute study dismisses the notion, recently debated in the U.S. media, that the shale…

• Natural Gas Analysis for the Week of July 25, 2011

  The spike in September Natural Gas futures came to an abrupt ending early last week as weather forecasts took out the chance for an extended heat wave across the United States. The short-covering rally triggered by excess demand briefly breached a minor 50% price level at 4.327, reaching 4.586 before selling off. The inability to attract fresh buying and the quick ending to the rally is a solid example of just how much supply is out there. Without weather to steer the market higher, expectations are for the market to continue to trade sideways-to-lower over the near-term. Taking excessive heat…

• How Long Will Natural Gas Prices Stay Low?

  The natural gas market’s underperformance in the investment world hampers its current role as (at least an investment) alternative to crude oil, effectively making the abundant fuel take a backseat. The biggest hurdles for gas production and consumption to become as ubiquitous as that of oil – or at least as profitable – were recently outlined by Mickey Fulp, who calls himself the Mercenary Geologist, which I’ll summarize below: • Supplies: Abundant. (And often re-exploited on top of existing wells.) • Risk/Reward: Natural gas’ development play requires low risk venture capital. • Transportation: Natural gas is difficult to transport, needing dedicated pipelines to…

• The Return of Gazprom

  The December 1991 collapse of the USSR was an unmitigated disaster for all 15 nations emerging from the desiccated carapace of the Soviet Union. Now, like a plate of mercury smashed with a hammer, rivulets of the former USSR member state’s energy assets two decades later are trickling back under the control and influence of Eurasia largest energy concern, Gazprom. All the new post-Soviet states faced the triple problems of raging hyperinflation, evolving ad hoc nationalistic policies and, perhaps most importantly, coping with the detritus of Union-wide systems that suddenly deposited fragments of their former selves on the territories of…