Methonex (MEOH)

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http://finance.yahoo.com/news/natural-gas-down-6th-day-130748479.html

Natural gas down for 6th day, breaks to 10-year low

By Eileen Houlihan

NEW YORK (Reuters) - Natural gas futures slid about 4 cents early Monday, with the front month contract tumbling to a 10-year spot chart low, as mild spring weather and record high supplies continued to pressure prices.

Front-month May natural gas futures on the New York Mercantile Exchange were at $2.088 per million British thermal units in early activity, down 3.8 cents, or nearly 2 percent, after sliding to $2.069 in electronic trade, the lowest price for a front month since February 2002.

Several bearish reports late last week, including government data on inventories and production and industry data on drilling, combined to pound gas prices down 19 percent in March, their biggest monthly drop since August 2010.

The front contract also shed 29 percent in January to March in the biggest quarterly decline in two years.

In the cash market, gas bound for the NYMEX delivery point Henry Hub in Louisiana was heard early at $1.88 on active volume over 1 billion cubic feet, down 12 cents from Friday's $2.00 average and at its lowest mark since September 2009.

Early Hub cash deals were done at about a 23-cent discount to the front month, little changed from deals done early Friday at a roughly 21-cent discount.

Gas on the Transco pipeline at the New York City gate was heard near $2.04 on volume near 258 million cubic feet, also down 12 cents from Friday's average of $2.16.

PRODUCTION BIG PROBLEM FOR BULLS

Baker Hughes data on Friday showed the gas-directed rig count rose by six to 658 after hitting a 10-year low of 652 the prior week. It was the first gain in the gas rig count in 12 weeks.

(Rig graphic: http://r.reuters.com/dyb62s )

The steady drop in dry gas drilling this year, the gas count is still down nearly 30 percent since peaking at 936 in mid-October, had stirred expectations that low gas prices would finally force producers to curb gas output and tighten supplies.

But the drop has yet to be reflected in pipeline flows, which are still estimated to be at or near record high levels, primarily due to rising output from shale.

U.S. Energy Information Administration production data last week offered little hope for the bulls, with January gross gas output climbing to a record of 72.85 billion cubic feet per day, eclipsing the previous peak of 72.68 bcfd in November.

The slight drop the agency reported for December, the first measurable decline since well freeze offs curbed output in January and February 2011, had raised expectations that producers might finally be curtailing output.

Some analysts say the gas-directed rig count may have to drop below 600 to reduce flowing supplies significantly, noting the producer shift to higher-value oil and gas liquids plays still produces plenty of associated gas that partly offsets any reductions in pure dry gas output.

Most analysts do not expect any major slowdown in gas output until later this year.

INVENTORY WORRIES

EIA data on Thursday showed total gas inventories rose by 57 billion cubic feet to 2.437 trillion cubic feet.

(Storage graphic: http://link.reuters.com/mup44s)

The build, the second in 2012 and the largest ever for March, drove stocks further into record territory for this time of year and sharply widened the already huge surpluses to year-ago and the five-year average.

Utilities typically build inventories from April through October to help meet peak winter heating needs, but builds this year started about two weeks earlier than usual, and storage is set to finish the month near 2.5 tcf, about 60 percent above normal and easily above the previous March 31 record of 2.148 tcf set in 1983.

Early injection estimates for this week's EIA report range from 8 bcf to 49 bcf versus last year's adjusted draw of 29 bcf and the five-year average build for that week of 8 bcf.

The inventory surplus will provide a hefty cushion to meet any spikes in demand or storm-related disruptions in supply this year. It is expected to grow further in coming weeks, at least until stronger air conditioning demand slows builds.

MORE FUNDAMENTALS

The National Weather Service six- to 10-day outlook issued on Sunday called for above-normal readings for much of the mid-Continent and normal readings along the East Coast. Some below-normal temperatures were expected only in the West.

Nuclear plant outages were running at about 23,000 megawatts, or 23 percent, on Monday, up from 20,900 MW out a year ago and a five-year outage rate of about 20,500 MW.

Traders said the outages should add more than 1 bcf to daily gas demand.

(Reporting by Eileen Houlihan; Editing by John Picinich)
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David • Cheyenne, United States • Show location HelpComment Guidelines
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Tim
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Tim • Wichita, Kansas • 11 hours ago Report Abuse

We have the resources and technology to be energy independent for the next 100 years. In that length of time (assuming some plan/any plan is established) we should be able to find an alternative energy solution. Natural gas powered vehicles would create stability in our energy market and stop the... More

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Consider This
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Consider This • 8 hours ago Report Abuse

Another significant economic benefit of NG will be change over from petrol based polymers. It is very likely that the US will become the low cost producer of plastics and the leading exporter of base chemicals in everything from Ag to finished products. The US government should be focusing on... More

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US Navy ret
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US Navy ret • Branson, Missouri • 4 hours ago Report Abuse

we need the nat gas act (pickens plan) now. Firing every pos in washington dc would be a great start.

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tmandwn
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tmandwn • Newark, New Jersey • 9 hours ago Report Abuse

There has never been such a large disconnect between nat gas and oil prices. I wonder if our government's competely incompetent energy policies have something to do with this? I bet if someone said all federal vehicles were to trnastion to nat gas oil would drop significantly over night and nat gas... More

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Barrista Bob
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Barrista Bob • New York, New York • 10 hours ago Report Abuse

Hi Guys, in trying to do some DD on Natural Gas, are there any companies that are behind all of these headlines?

Thanks in Advance.

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Daniel
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Daniel • 9 hours ago Report Abuse

sounds like a great time to buy NG

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David
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David • Houston, Texas • 12 hours ago Report Abuse

Hey PirateEYE4, where did you get your education...the Communist/Socialist School of Economics? How about we channel all of YOUR paycheck profits to green energy and jobs. Supply and demand will naturally govern the extent of market growth and shrinkage. If you think not, try selling winter resort... More

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pirateEYE4
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pirateEYE4 • Calgary, Canada • 14 hours ago Report Abuse

Low energy prices are essential for a support of consumer based economy.
Keep the NG prices low the energy companies don't need to be ripping the consumer off.
Chanel any profit into development of green energy sector and jobs in that sector.

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B
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B • McLean, Virginia • 11 hours ago Report Abuse

Wow, I was in Bolivia and ALL of the cars down there run on NATURAL GAS AND traditional gas... So this would be around $10 a barrel of gas - or about $.40 a gallon of gas. BOLIVIA is a 3rd world country and they have BETTER technology than the US? Wow!!! Imagine that! Welcome my friends to the... More

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spotted owl
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spotted owl • 11 hours ago Report Abuse

Storage inventories will grow rapidly as utilities and those who store natural gas for future sales will increase storage as quickly as possible to take advantage of declining storage availability. With supply robust and demand modest, the only place to put gas will be storage or to cut-back... More

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