NYMEX Continues Decline

The NYMEX February gas futures contract dropped another 16.7 cents on Wednesday settling at 2.774/MMBtu, a 28 month low for a prompt-month settlement.

Analysts attribute the NYMEX's sharp decline to unprecedented supply levels in combination with moderate weather that is expected to continue over the next month.

The February gas futures contract is currently trading at $2.67, another $0.09 lower than it settled yesterday. By comparison, the 12 month strip is trading at $3.04/MMBtu and this year's winter strip (Feb 12 - Mar 12) is trading at $2.70/MMBtu.

Drillers Take Last Shot at Proposed NYS Fracking Rules

The gas industry made it final remarks Wednesday about the proposed fracking regulations in New York, as the public comment period came to an end receiving more than 20,000 comments.

According to Brad Gill, executive director of the Independent Oil and Gas Association of New York, "In its current form, the draft Supplemental Generic Environmental Impact Statement imposes permit guidelines that fail to strike a balance between future exploration of New York's vast natural gas reserves and the appropriate, necessary protection of our environmental resources." 

According to IOGA, the proposed regulations would reduce the area available for exploration in the Southern Tier by about 50%, which is estimated to withhold more than $21 Billion from the state in expected royalties and tax revenue in the region.

IOGA also asserts that the regulations "exceed realistic and reasonable modeling, expectations, and performance," and will put New York at a competitive disadvantage to neighboring states without such regulations.

Storage

Working gas in storage was 3,377 Bcf as of Friday, January 6, 2012, according to EIA estimates. This represents a net decline of 95 Bcf from the previous week.

Stocks are now 398 Bcf higher than last year at this time and 491 Bcf above the 5-year average.

Weather

Although the weather has been unusually warm for this time of year, some more familiar January weather is expected this weekend in the Northeast. There is a 70% chance of snow throughout the day on Friday and temperatures are not expected to exceed 20 degrees Fahrenheit on Saturday.