OCT 09 MARKET UPDATE

STORAGE REPORT
This week’s EIA storage report for the week ending September 25, 2009:
This week’s injection of: 64 Bcf
Leaving this week’s balance at: 3589 Bcf
This week’s balance last year: 3098 Bcf
This week’s balance, 5-yr average: 3108 Bcf

Natural gas storage is 15.5 percent above the 5-year average level. Natural gas storage inventories reached record-high of 3.589 Tcf with five weeks remaining in the traditional refill season. Many analysts now expect storage levels at the end of October to top 3.9 Tcf.

THOUGHTS ON THE MARKET

Regardless of natural gas storage levels, we are in the 4th quarter and gas prices rally. So far the percentage increase from the single day low price of $2.409 on Sept 4th to the November contract single day high of $4.975 is 107%. History shows that hedging forward gas during the 4th quarter results in overpaying for budget insurance. You may want to wait to make any more forward purchases until prices decline to the 1st quarter low.

For all of its merit, natural gas vehicles don’t appear to be big future gas consumers, as hybrids take off in their stead. It will be gas fired power generation, with a carbon footprint as much as 60% lower than coal plants that will be the future’s big gas consumer.