There’s really no other way to say this: nothing much happened this week.
Prices bounced around within a fairly narrow range all week. Today’s weekly storage report came in a few Bcf under expectation, and the price is currently up to around $4.00, but this reaction can be considered knee-jerk at this point. By the beginning of next week, it will drift down, after which it will most likely spend a few days…bouncing around within a fairly narrow range.
All indications continue to point to a gradual downward trend as we head into summer, although the direst precitions have not yet actually materialized. There will, no doubt, continue to be short-term overraction to anything resembling good news (Raymond James stating on Tuesday that the 2009 natural gas market was “hosed” does not fall into this category), but for the moment, discussing the NYMEX natural gas price has taken on all the drama of the San Diego weather report. Today was in the mid-60s and partly cloudy. The rest of the week? Mid-60s and partly cloudy.
It’s likely that investors have turned their attention to where the action is: oil. The oil markets have rebounded nicely (if you happen to be an investor or a producer…less so if you drive a car) in the last few weeks. Anyone who doubts the decoupling of the energy markets should check out the divergence in the past month. Two very different stories.
We are even seeing indications that the reliable link between natural gas and electric rates may be doing a bit of decoupling as well. We have seen some local ratcheting up of electric rates, despite the even path of natural gas. It’s too early to tell if this is a trend or not, but it bears watching. The eventual effect on eletric rates of the proposed Cap and Trade legislation, which is currently mired in congress, will add a new level of complexity to what was once a very predictable relationship.
So there is still plenty to keep the energy markets interesting. We’re keeping our eyes open.