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Chesapeake Energy Corporation Message Board

  • iamnathan iamnathan Feb 14, 2013 12:37 PM Flag

    More Power Plants will increase NG demand and the CHK SP !

    This is another from today that discloses the increased expansion of NG powered electric power plants.

    Most important part of the following, starts at paragraph 9.
    ---------------------------------------------------------------------------------------------

    EIA data drives US natgas futures below chart support
    02/14 07:16 AM

    * High inventories, record production weigh on prices
    * Coal switching, nuclear plant outages lend some support
    * Coming Up: Baker Hughes (BHI:$47.39,00$1.26,002.73%) rig data, CFTC trade data Friday

    (New throughout, changes byline, adds EIA data, analyst quote,
    updates prices)
    By Joe SilhaNEW YORK, Feb 14 (Reuters) - U.S. natural gas futures
    tumbled sharply on Thursday, with the front-month contract
    sinking below technical support after a government report showed
    a weekly inventory withdrawal that again fell short of market
    expectations.

    The U.S. Energy Information Administration report showed
    total domestic gas inventories fell last week by 157 billion
    cubic feet to 2.527 trillion cubic feet.

    Most traders viewed the decline as negative for futures
    prices, noting it was the third straight week that it fell short
    of market expectations. A Reuters poll on Wednesday showed
    traders and analysts had expected a 162-bcf drop.

    "The net withdrawal for last week was below the consensus
    expectation and bearish for prices, although the draw was still
    slightly more than the five-year average for the date," Citi
    Futures energy analyst Tim Evans said in a report.

    "Overall, the report suggests a further minor bearish shift
    in the background supply/demand balance, with modest bearish
    implications for reports to follow," Evans added.

    At 11:35 a.m. EST (1635 GMT), front-month gas futures
    on the New York Mercantile Exchange were down 14 cents, or 4.2
    percent, at $3.166 per million British thermal units after
    sliding to an intraday low of $3.161 after the EIA report.

    Just prior to release of the weekly storage data at 10:30
    a.m., the front month was trading at around $3.28.

    Gas prices this year have mostly been stuck in a trading
    range between $3.20 and $3.60, but chart traders noted that
    Thursday's selloff drove the front contract below technical
    support at the double bottom in the $3.20 area. Most agreed a
    close today below that level could drive prices lower.

    But some noted that current gas prices were low enough to
    prompt more utilities to switch from coal to gas to generate
    power, while hefty nuclear plant outages this week of more than
    14,000 megawatts could boost gas demand further.

    Gas-fired units are typically used to offset any shut
    nuclear generation.

    After a fairly mild week this week, MDA Weather Services
    sees temperatures in the West mostly averaging below normal for
    the next two weeks, while the eastern half of the nation will
    see mostly seasonal readings during that period.

    Despite the colder outlook, many traders remained skeptical
    of any upside in prices with winter winding down, inventories
    still high and production flowing at or near an all-time peak.

    STORAGE DRAW ABOVE LAST YEAR, FIVE-YEAR AVERAGE

    While the weekly withdrawal fell short of expectations, some
    traders noted it came in well above the 113 bcf decline seen
    during the same week last year and slightly above the five-year
    average for that week of 154 bcf.

    The draw sharply widened the deficit relative to last year
    by 44 bcf to 270 bcf, or 10 percent below last year's record
    highs for that time. It trimmed 3 bcf from the surplus versus
    the five-year average, but still left storage relatively high at
    348 bcf, or 16 percent, above that benchmark.
    (Storage graphic: linkDOTreutersDOTcom/mup44s)

    Early withdrawal estimates for next week's inventory report
    range from 118 bcf to 154 bcf. That would be below the 155 bcf
    pulled from storage during the same week in 2012 and possibly
    below the five-year average decline for that week of 140 bcf.

    If drawdowns for the rest of winter match the five-year
    average pace, inventories will end March at 2.076 tcf, about 20
    percent above normal but 16 percent below last year, when stocks
    finished a very mild heating season at a record high 2.48 tcf.

    DRILLING DECLINES, PRODUCTION FAILS TO SLOW

    While the Baker Hughes (BHI:$47.39,00$1.26,002.73%) gas-directed rig count has
    fallen in four of the last five weeks and is hovering not far
    above a 13-1/2 year low hit three months ago, record production
    has shown no significant signs of slowing.
    (Rig graphic: rDOTreutersDOTcom/dyb62s )
    EIA expects marketed gas production to hit a record high
    70.02 bcf per day this year, the third straight annual record.

    (Reporting by Joe Silha; Editing by Marguerita Choy)

    Sentiment: Strong Buy

 
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