OCTOBER 11 MARKET UPDATE

STORAGE REPORT
This week’s EIA storage report for the week ending September 30, 2011:
This week’s injection of: 97 Bcf
Leaving this week’s balance at: 3,409 Bcf
This week’s balance last year: 3,487 Bcf
This week’s balance, 5-yr average: 3,381 Bcf

ROCKY MOUNTAIN ENERGY CONFERENCE

Please join me on Oct 28th at the Sports Authority Field at Mile High at 9:00 a.m. to attend the Rocky Mountain Consumer Energy Conference. The information presented at this conference will help you budget for rising energy costs. Representatives from British Petroleum (BP) and Xcel Energy will kick off the conference. (No punt intended.)

Register today for the Rocky Mountain Consumer Energy Conference at http://www.rmcec.org.

THOUGHTS ON THE MARKET

With gas trading below the 1st quarter low, the stage is set for continued price weakness into the early 4th quarter. For only the third time since the NYMEX began traded natural gas, we are seeing the 3rd quarter low exceeded during October. This is a great time to lock in future gas prices to eliminate risk. The prices could continue to go lower but be aware that things could be “jumpy” this time of the year.

The trend of mega-injections will continue for the next few weeks and the storage gap to last year will further close. Keep in mind that injections last year were large too, so it will be difficult to catch up to last year’s levels.

Please mark your calendars for the Rocky Mountain Energy Conference hosted by Asgard to be held on Oct 28th at Invesco Field at Mile High this year. More info will follow soon.

STORAGE REPORT
This week’s EIA storage report for the week ending June 17, 2011:
This week’s injection of: 98 Bcf
Leaving this week’s balance at: 2354 Bcf
This week’s balance last year: 2612 Bcf
This week’s balance, 5-yr average: 2418 Bcf

THOUGHTS ON THE MARKET

Gas sold off a little after the traditional post-July 4th rally. Two weeks ago we had the same opening and closing price which generally means a change in direction. Nobody has ever “rung the bell” to tell me when the low is in, and this year won’t be any different. We are only in the “E” in the hurricane alphabet so we have a ways to go.

The NYMEX September gas futures fell below $4.00 for the first time since March this past Thursday. Fluctuating weather forecasts in the coming weeks and abundant supplies of gas continue to provide little support for sliding gas prices. We may be approaching the 3rd quarter low for those who are interested in locking in a fixed price at this time.

Natural gas prices are likely to remain relatively firm in Sept, considering the warmer-than-normal temps that are expected to remain in place over most of the country. Natural gas prices may not collapse significantly in Oct due to the much warmer-than-normal temps which is causing the natural gas inventories to run below last year’s levels and below the 5 year average so far this summer.

STORAGE REPORT
This week’s EIA storage report for the week ending June 17, 2011:
This week’s injection of: 98 Bcf
Leaving this week’s balance at: 2354 Bcf
This week’s balance last year: 2612 Bcf
This week’s balance, 5-yr average: 2418 Bcf

THOUGHTS ON THE MARKET

It has been a long time since I’ve done one of these newsletters – anyone miss it? Hopefully I can get back on track sending these out.

Although meteorologists predict an above-average Atlantic hurricane season the year, traders and analysts believe the continued churn on onshore production will dampen any storm-related price volatility. The impact of the hurricanes season depends on where the demand and supply are and what our temps are when we start to see the development of the storms.

Natural gas made a new 2nd Quarter high earlier this month which is in line with the increase we had in 2nd Quarter 2010. I’ve said this before that traditionally July 4th low or the September time frame is a good time for hedging long term deals.

STORAGE REPORT
This week’s EIA storage report for the week ending January 14 2011:
This week’s withdrawal of: 243 Bcf
Leaving this week’s balance at: 2716 Bcf
This week’s balance last year: 2642 Bcf
This week’s balance, 5-yr average: 2665 Bcf

Despite the largest draws of the heating season so far, the surplus to last year’s gas storage level managed to expand. Analysts agree that it might not matter where storage stocks are on April 1st with the expected aggressive production growth and the bearish sentiment already in the market. Production is to grow rapidly in 2011 and they expect to start Oct 2011 with record storage.

SOURCE GAS AG CHOICE PROGRAM

If you have not chosen your natural gas supplier for the upcoming Ag program in Nebraska that time is just around the corner. Selection forms will be mailed out soon and your selection must be made by Tues, Mar 1st. Asgard plans on attending the open houses so be sure to stop by our table to see what the pricing options are for the upcoming year. Multi-year agreements are now available so you will not be required to make a selection every year. The 2011 Ag program begins Friday, April 1, 2011. Please call me with any questions or even pre-sign prior to the selection period at 888-379-1968.

THOUGHTS ON THE MARKET

Well, finally after three weeks of trying to complete and updating this each week it is being sent out today.  Natural gas remains range bound in spite of an attempt by the bulls to push prices to their $5 goal. Despite the cold weather we will soon see prices falling to establish the 1st quarter low (most likely during March) but not before NYMEX hit the highest prompt month settlement since Aug 4, 2010 as unseasonably cold weather tightened its grip last Friday.

Spring arrives in 56 days (not soon enough for me) or being pessimistic winter is only 33 days old with about 2/3rd left to endure.

STORAGE REPORT
This week’s EIA storage report for the week ending December 10 2010:
This week’s withdrawal of: 164 Bcf
Leaving this week’s balance at: 3561 Bcf
This week’s balance last year: 3596 Bcf
This week’s balance, 5-yr average: 3240 Bcf

EIA reported this was the first triple-digit draw of the season and was above the expectations and surpassed the five-year average.

THOUGHTS ON THE MARKET

Natural gas remains range bound, even though it closed last week in the low end of that range. With cold temps gripping much of the country for the first half of Dec (except us), the heating season is well underway. None the less, a trend of rising prices since Thanksgiving ended during this week. Expect increasing volatility with higher lows and higher highs throughout December with a potential short term spike above $5.00.

Jan 2011 is trading much lower than the settlement prices for comparable months over the last two years. The Jan 2010 and Jan 2009 expired at $5.81 and $6.14/MMBtu, respectively. The market appears to be more focused on the weather with forecasters calling for the last week of Dec to be milder than this week in many regions.

STORAGE REPORT
This week’s EIA storage report for the week ending October 8, 2010:
This week’s injection of: 91 Bcf
Leaving this week’s balance at: 3590 Bcf
This week’s balance last year: 3708 Bcf
This week’s balance, 5-yr average: 3343 Bcf

We are currently 7.4% above the five year average.

THOUGHTS ON THE MARKET

Gas prices were down over the course of the last week amid near-term demand due to mild weather and bearish production data from EIA. Gas supplies are adequate to meet consumer needs this heating season even if the US experiences a repeat of last winter’s record demand. The Nov NYMEX futures contract hit a 13-month low this week, the lowest close for a prompt-month contract since Sep 15, 09. The gas rigs count were steady and weather remains mild.

Our La Nina weather pattern bodes for a milder than normal winter, and the pundits are talking about a glut of gas for the next millennium. Future gas prices represent an exceptional bargain as virutally all “bad news” events have been discounted from future prices. The one year strip hasn’t been this low since Nov of ‘02.

With only two weeks remaining in the “traditional” refilling season, last year’s total as of 11/1 seems safe, but if mild temps persist we could continue with net weekly injections through Nov. Gas prices have responded by posting a lower Nov price than the 3rd quarter low, an event that has occurred only once before in the history of NYMEX gas trading.

The Kansas Gas Service 2010 Winter Preparedness Meetings are scheduled from Sept 28th – Oct 6th. I plan to attend each of these meetings and look forward to seeing you there.