Oil and gas futures cam down but not natural gas

Oil and gasoline futures came down substantially on Thursday as people realized the tropical storms reaching the gulf had died down enough to not be considered dangerous. There is now no fear of them hitting the refineries as they have been down graded below the tropical storm levels they were at. 

Investors have started to pay more attention to the struggling economy and the falling stock market rather then where oil and gas futures are going.

Natural gas ended higher even though large surpluses were reported in the storage report

Natural Gas futures ended higher after several ups and downs despite the government surplus report showing a large inventory of Natural Gas in the ground. The Natural Gas inventories have been growing larger then expected and as an energy trader you would expect this would cause energy futures to start coming back down but this has not happened yet.

Tropical storm Erin appeared spared most of the Gulf Coast oil and gas infrastructure.  Tropical storm Dean is expected to pass to the south of the Gulf, making landfall on Mexico’s Yucatan Peninsula.

Natural gas has fallen about the same as stock prices have taken a plunge.

 Is there some type of correlation with the financials market? It certainly makes you think. We see that Natural Gas has taken a nose dive down. Now let’s look at a stock exchange index and compare.  Whenever you seen the stock market take a harsh move down it would probably be an indicator of what Natural Gas may doing as well.

NYMEX Natural Gas Futures Chart

Now take a look at the S & P 500 over the same time frame. The nose dive spurred on Natural Gas to do the same or so it would appear.

S&P 500 Index Chart

Natural Gas Prices

Gas rose a fraction today

 Natural Gas Prices today rose a fraction higher but not enough to cause a stir. Yesterday we saw them close at $6.20 MMBtu and today they are at $6.29 MMBtu. This small move has seen the markets remain flat across sectors that correlate strongly with this carbon fuel.

Flat market with Electricity in the state of Texas

Texas electricity has maintained a flat market today with this news and could possibly see electric rates drop tomorrow with no new signs of tropical storms in sight and summer heat remaining around the same temperature we have been at.

Texas has the wettest year on record

One possible cause for lower then usual summer temperatures could be to the fact that rain has kept the temp down enough that Texans do not turn up the air conditioning quite as high. According to recent news Texas has had the wettest year on record starting with the first 7 months of the year. This has been the first no drought year in a decade.

Weather pattern reaches outside of Texas

This wet weather is not just affecting Texas but is similar all around the bordering states and into the carribean. Electricity Rates and Natural Gas continue to cut those who rely on them a break adding needed dollars to the bottom line. Let’s hope the weather and the energy rates remain low for a few more months.

A gradual trend down in the settlement price, that isn’t what they said would happen?

The Natural Gas Price in the United States has shown a gradual trend down over the last 2 months. It seems quite strange to many as they have been told by the electricity providers to hurry and sign up before the summer because natural gas will be in high demand as people start to turn on their air conditioning and using up all that electricity.

Has the summer caused a spike in Natural Gas Prices?

The summer has had the opposite effect. There has been more then enough natural gas in storage to meet with the demand. This surplus has caused energy traders to rethink things this year as the natural gas price has been trading low over the last two months. In Texas we have a 90% correlation with natural gas in terms of electricity and so we have seen electricity prices go from the high 9′s down to below 7 cents per kwh the last 2 months. Many people are scratching their heads after being told to sign up on the 9 cent electric rate when now in the dead heat of summer we are seeing rates as low as 7 cents a kwh.

Did the electric provider at TXU lie to me?

No they didn’t lie they just speculated on what natural gas usually does every year. During the summer you see some superficial spikes up when people turn on their air conditioners. This then effects the storage supply’s of natuarl gas so when these air conditioning spikes occur they lose that storage necessary to cover peak demand times. This comes very close to causing a shortage and so the price goes up. So did they lie to you? No you can’t call it that. Sure they wnted your sale but they were actually giving you a decent guess as to what might happen. Are sales people dishonest? Many times yes and they can sometimes offer you more information but this time we can’t say they lied.