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Permalink Reply by Chartist on March 20, 2013 at 11:38am

NG futures are forming a cup and handle bottom pattern....If it breaks above $4 and continues on, it appears that $6.00 per MCF is the ultimate target.....The chart looks very constructive.

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Permalink Reply by Jack Straw on March 20, 2013 at 1:52pm

$4 is approaching the price at which utilities will find it economical to switch back to coal from NG for base load. The current low demand/cost for thermal coal would encourage a move back to coal.

Some of the earlier switching from coal to NG will be permanent - but, not all.

As much as I would like to see $6/mcf NG, in the short term it is likely a struggle.

Also, an unknown quantity of NG is being held back by Operators due to their throttling back of production, higher prices will reduce the amount held back.

We are approaching the Spring shoulder season, a time of reduced NG consumption, not exactly bullish for NG.

As prices rise, more rigs will return, as the economics improve enough to encourage drilling.

The "technicals" may appear positive; but the fundamentals look bearish.

 

All IMHO,

                JS

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Permalink Reply by mike on March 26, 2013 at 11:21am

This from bloomberg

Energy & Oil Prices

Crude Oil & Natural Gas

Commodity	Units	Price	Change	% Change	Contract	Time(ET)
Crude Oil (WTI)	USD/bbl.	96.19	-0.15	-0.16%	May 13	18:03:19
Crude Oil (Brent)	USD/bbl.	109.36	+1.19	+1.10%	May 13	18:00:00
TOCOM Crude Oil	JPY/kl	61,880.00	+840.00	+1.38%	Aug 13	14:59:30
NYMEX Natural Gas	USD/MMBtu	4.00	+0.01	+0.30%	Apr 13	18:03:16

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Permalink Reply by Chartist on March 26, 2013 at 11:47am

All fundamentals are known by the market participants....Technicals drive short term markets....I see we're slightly above $4 now on the futures.....

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Permalink Reply by Jack Straw on March 26, 2013 at 5:40pm

Utica Shale,

Nymex prices are Henry Hub futures (as in Henry, Louisiana) for the front month; currently April, about to roll over to May.

What a landowner receives in royalties is largely dependent upon what pipeline the Natural Gas goes into. if you are unfortunate and are in Western PA and your gas goes into the Transco Zone 4 pipeline, you tend to realize an exceptionally low price.

No easy/definite answer to your question,

Nymex futures prices can be deceiving; to predict royalties, you need to know what pipeline your gas goes into ... and to which Hub or Gate that pipeline leads.

 

As an aside, we are heading into the Spring Shoulder Season, a period of time when heating tends to go down, and cooling (AC) has yet to start. How prices behave this Spring Shoulder Season will be most interesting.

 

All IMHO,

                  JS

 

 

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Permalink Reply by fracking good on March 26, 2013 at 11:49am

NG burns cleaner than coal, regulations going to price coal out of being a source of energy, short term fluctuation in price of NG do not matter in the long run 

 

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