Market Commentary

Weekly Recap

March 16, 2015

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  • The biggest movement last week occurred on Monday when the prompt month shed more than 16 cents. It coincidentally marked the fourth straight Monday in which the prompt month decreased in value. Perhaps that is an irrelevant fact but maybe it gives a broad indication that as the week begins the prevailing theme in the market is to start off on a bearish note.
  • The rest of the week was fairly uneventful as the market rose Tuesday and Wednesday in anticipation of another storage withdrawal near 200 BCF. When Thursday’s report showed a 198 BCF draw from storage, the market reacted bearishly and dropped on Thursday and Friday.
  • While 198 BCF was far above historical norms, it also was the last significant withdrawal of the season. This weeks report is based on last weeks usage which was far more seasonable for March. We currently stand 225 BCF behind the 5 year average but almost 500 BCF ahead of last year. Considering daily production is on par higher with last year, market participants are focusing much more on the year over year surplus than they are the deficit to the five year average.
  • Cooler than normal weather has crept back into the forecast but that type of weather in March is far less impactful than colder than usual weather in January or February and should have a more minimalized impact on pricing.
  • Electric prices were not nearly as bearish last week as natural gas prices. With cooling season around the corner, we will more closely track their correlation in the coming months.