Market Commentary

Weekly Recap

May 5, 2015

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  • The May 2015 futures contract expired for the month at $2.517 per MMBtu on Tuesday. The settlement price finished lower than April’s $2.59 expiration and marked the lowest prompt month expiration price since the summer of 2012.
  • As June 2015 assumed the prompt month position, it made a quick dart higher on Wednesday and Thursday with trading revolving around the upcoming injection report. Wednesday brought concern that an injection in the 84-88 BCF range would not match the previous week’s 90 BCF injection. Thursday re-vealed an 81 BCF injection which came in even lower than ex-pectations. Traders chose to ignore that the injection was high-er than historical benchmarks and instead focused on the bull-ish angle it presented.
  • While the 12 month natural gas strip followed the prompt month’s lead throughout the week, the 12 month strip average for the various electric points listed below seemed to have a mind of their own this week. Electric prices moved higher by just 1.3% or less including in the New York market which usually trends the way of the NYMEX. It appears that pleasant weather through much of the country kept a ceiling on forward electric prices. Until we see this occur on a regular basis, we will still lean towards using natural gas as the best directional indicator for electric pricing.