Daily Natural Gas Price Report

Yesterday, the September 2009 natural gas NYMEX contract hit a new low of $3.117 per MMBtu – breaking the prior low of $3.155 per MMBtu set in late-April.  What does this mean?  If this is ultimately the third quarter low, historical seasonality indicates that natural gas prices will eventually move toward $6.50 in the fourth quarter.  A price gain of that magnitude seems a little extreme given the supply/demand situation, but it isn’t as outrageous as it sounds.  The January 2010 natural gas NYMEX contract is already trading at $5.45 per MMBtu, so this target would be fulfilled with a $1 per MMBtu price gain, and that is possible on a hurricane scare. 

With the tropics heating up, we believe the low is in for a while but we don’t believe the bear market has yet ended.  With seven days of price losses, we expect speculators to step in and take some profits and that profit taking may provide some temporary support to natural gas prices.  We say “temporary” because we anticipate that the surplus in storage, the lack of demand, and the delayed economic recovery is going to continue to prevail in pushing natural gas prices lower in Sep/Oct.

OUTLOOK:  We're still quite bearish long-term and expect a price pullback in the next 30-90 days that will have a dramatic price impact on NYMEX contracts for November 2009 and beyond.  The caveat to this outlook is some type of unexpected quick legislation that imposes new regulations on speculative investors.

 
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About Energy Solutions, Inc.

Formed in 1996, Energy Solutions, Inc. is independently owned and is not a natural gas marketer, broker or supplier.  We are an independent, natural gas buying advisory service that provides assistance nationwide to commercial and industrial businesses in the purchase of natural gas and/or the development and implementation of a natural gas buying strategy. 

Learn more about the services of Energy Solutions, Inc. at www.energysolutionsinc.com