NYMEX Settles 11 Cents Higher

After an up and down trading day on Thursday, the NYMEX settled 14.2 cents higher than it opened, and the trend continued Friday rallying another 11.7 cents, settling at $2.684/MMbtu

Thursday's storage report, the EIA's storage predictions, and Friday's announcement that Encana will be reducing production by 600,000 Mcf/d due to low NG prices, are what many analysts believe to be the major contributing factors to the NYMEX's sudden climb.

The March gas futures contract is currently trading at $2.615/MMBtu, about $0.07 lower than it settled yesterday. By comparison, the 12 month strip is trading at $3.14/MMBtu and next year's winter strip (Nov 12 - Mar 13) is trading at $3.59/MMBtu.

Texas Study: No link between Fracking and Water Contamination

Researchers at the University of Texas at Austin recently released the results of a study indicating no direct link between any reported cases of ground water contamination and the process of hydraulic fracturing.

Like numerous studies before, the evidence indicates that any contamination was most likely a result or poor drilling practices performed in the past, and not the process of Fracking itself.

When performed responsibly, meaning that all cement casings are secure, all wastewater is properly disposed of, and rig integrity inspections are routinely performed, Hydraulic Fracturing is an absolutely safe process that will allow the United States to reduce dependence on foreign oil and keep domestic energy costs low.

Storage

Working gas in storage was 2,761 Bcf as of Friday, February 10, 2012, according to EIA estimates. This represents a net decline of 127 Bcf from the previous week, slightly above the estimate of between 116 and 120 Bcf.

Despite the higher than expected withdrawal, stocks are still 817 Bcf higher than last year at this time and 765 Bcf above the 5-year average of 1,996 Bcf.

The EIA's prediction of larger than expected withdrawals in the coming weeks is mainly a result of "storage ratchets," which are contractual obligations to withdraw a pre-determined proportion of gas.

Weather

Temperatures in the Northeast are expected to climb up into the 40's throughout the week, dropping down below freezing for this weekend.