DJ In-Line EIA Data Leave Nymex Gas Seeking Direction
By Spencer Jakab
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Natural gas futures prices received a small lift
following a report by the Energy Information Administration that showed a build
in line with expectations in Thursday's weekly storage report, but questions
about the upcoming winter remain unresolved.
The reported build of 53 billion cubic feet was one bcf more than the
consensus in a Dow Jones Newswires survey and two bcf less than the implied
expectation in an auction of options by ICAP Energy and Nymex. The build leaves
total storage at 3,282 bcf, some 5.8% above the five-year average, and only 40
bcf shy of last year's record for the date.
Though it strayed little from expectations, the build far exceeded the
five-year high for the weekand, according to Tim Evans, an analyst at IFR
Pegasus, represents the biggest year-over-year gain in injections since July
2003. This is all the more remarkable given the substantial loss of production
from the Gulf of Mexico during the week.
But the Federal Energy Regulatory Commission warned Thursday after the report
that high absolute levels of storage are insufficient protection against supply
problems this winter, noting that the continued loss of 4 bcf a day of supply
from the Gulf of Mexico, some 10% of U.S. production, isn't insignificant.
"The past three reports of continued injections have effectively put the
country in a position to manage cold weather for the rest of winter," Steve
Harvey with FERC's office of market oversight and investigations told the
commission. However, Harvey warned that "storage alone may not be able to make
up for continuing severe supply reductions in the Gulf."
Earlier in the day, chief executive officer of XTO Energy (XTO) Bob Simpson
said in a CNBC television interview that 5% of U.S. supply may be lost
permanently due to hurricane damage, and that prices have the potential to
spike to $20/MMBtu this winter.
The storage builds of 114 bcf over the past two weeks are likely to be
followedby a small draw of about seven bcf next week, according to Mike Schick,
president of consulting firm Energy Analytics. This makes an unusual net
addition to storage in November, the first month of the withdrawal season, a
distinct possibility.
"Without question, it's very unusual," said Schick.
This also happened in 2001, which was the most mild November in over a
century in the mainland U.S.
"We should end January with a total of 2.6 tcf," said Schick, who expects a
worst case scenario of 1.15 tcf at the end of the heating season on April 1.
This would be considered a "safe" level by traders. Schick contends that demand
destruction has offset Gulf losses, making a winter supply crunch such as the
one FERC is warning about too pessimistic. Higher prices in the early part of
the season are still likely though, he said.
-By Spencer Jakab, Dow Jones Newswires; 201-938-4377;
spencer.jakab@dowjones.com
(David Bird in New York and Maya Jackson-Randall in Washington contributed
to this report).
(END) Dow Jones Newswires
11-17-05 1156ET
Copyright (c) 2005 Dow Jones & Company, Inc.
DJ info: 28072
N/DJCS,N/DJOS,N/OSCM,N/OSEN,N/OSTR,N/CNW,N/DJS,N/DJSS,N/DJWI,N/DRV,N/EGY,N/ENY,
/LNG,N/MKT,N/NMKT,N/SNEW,N/WEI
FSN1912 CENOT COMMENTS ENERGY
2005-11-17 16:56:53 UTC
^^^^^^
Cash is King until further notice!!!
My comments on companies are usually my opinion of long term success (years). The PPS may go up or down greatly in the meantime depending on the number of greedy suckers with money.
AI
