LNG Spot Prices Fall As Supplies Increase; US Market Is Brimming With Stocks.*** Gazprom Warns Of Major Fuel Crisis In Russia This Winter If The State Does Not Intervene In The Regions Soon *** The EU Now Is Relieved That Kiev & Moscow Have Reached A Nat. Gas Price Agreement For 2007 Supplies To Ukraine, With The Latter's PM Being Close To The Kremlin; But Moscow Remains Tough On His Pro-West Boss *** Gazprom Sends LNG LNG (liquefied natural gas): see under natural gas. To S. Korea And Wants To Study All The Markets, Not Just The West *** The Qatar Gas Transport Co. Is To Own All Of Its LNG Tankers And Other Logistics *** Norway Begins LNG Delivery From Egypt, With Snohvit Delayed Spot prices of LNG began to fall in the past week in view of decreased US demand for new supplies due to unusually high inventories of natural gas on the US market. The New York Mercantile Exchange New York Mercantile Exchange (NYMEX) The world's largest physical commodity futures exchange. (NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). ) has become a major influence on global prices of energy, including natural gas. After a December 2005 peak of over $15 per million BTU Btu: see British thermal unit. , natural gas futures on NYMEX have fallen to less than $7.9/m BTU and the US market in the coming weeks would continue to be bearish Bearish Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value. bearish unless the winter cold gets more severe to change the situation. The worldwide effect of the US market on spot LNG prices became strong in the past week due to increased supplies diverted to Europe, which offset a small rise in spot prices for Asia-bound liquefied methane. The US market could not take any spot LNG because there was no longer room to store natural gas in the American north-east, despite a cold snap cold snap Noun a short period of cold and frosty weather Noun 1. cold snap - a spell of cold weather cold spell in the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of area and surrounding regions and colder weather in the mid-west. In Europe energy traders generally are nervous, with those concentrating on natural gas being more so because of fear of supply shortfalls from Russia (see below). The European market for natural gas is tightly balanced, in fact, with no shortage or surplus seen in the near term. But the volume of spot LNG bound for Europe has risen sharply in recent days because there were no takers in the US, where markets are brimmed brim n. 1. The rim or uppermost edge of a hollow container or natural basin. 2. A projecting rim or edge: the brim of a hat. 3. A border or an edge. See Synonyms at border. with natural gas stocks. In effect, the cost of gas storage in the US has risen in recent weeks because of a shortage of capacity. Natural gas by Oct. 29 was still being injected into whatever storage space was available in the north of the US. Forecasts for the US and European LNG markets are bearish on the assumption that the winter cold would not be so severe, in relative terms; but the situation may change in the event of colder weather. Gazprom, learning fast a complex LNG business, is sending purchased volumes to the Far East where demand is relatively stronger than in the West (see following pages). The price of front-month natural gas on NYMEX on Oct. 26 hit a three-week high of $7.929/m BTU. The weekly spot market for natural gas in the US north-east on Oct. 27 ended with the price settling at $7.15/m BTU. On NYMEX, natural gas for December on Oct. 27 closed at $7.83/m BTU and the forward peak was for February at $8.33/m BTU, up from $8.28 for January and $8.17 for March delivery. It was then forecast that the price trend was downward. Analyst Walter Zimmermann Walter Zimmermann (b. Schwabach, Germany, 1949) is a German composer. Zimmermann studied composition in Germany with Werner Heider and Mauricio Kagel, the theory of musical intelligence at the Institute of Sonology in Utrecht (now located in The Hague), and computer music at at United Energy on Oct. 28 was quoted by Reuters as saying: "We do think there is more upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside , but the problem is that natural gas is very close to completing an average pre-season rally. From a seasonal perspective, there is significantly more downside risk Downside Risk An estimation of a security's potential to suffer a decline in price if the market conditions turn bad. Notes: You can think of this as an estimate of the amount that you could lose on a stock or other investment. than upside potential Upside potential The amount by which analysts or investors expect the price of a security may increase. upside potential The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar ". A troubling sign has been futures open interest, which slipped more than 8,000 contracts over the previous month despite the sharp run up in prices. This means most recent buying on NYMEX for natural gas has been short covering and not new length. By late September, NYMEX gas futures had rallied 40%, but some are turning cautious on the bullish trend. Reuters on Oct. 28 quoted independent market analyst Dan Chesler as saying: "I have a bearish bias towards natural gas". Chesler added: "The rally has pretty much been isolated to the front month, and seasonally December has a strong tendency to decline between mid-October and mid-November, even in bull market years". The US Energy Department's EIA (Electronic Industries Alliance, Arlington, VA, www.eia.org) A membership organization founded in 1924 as the Radio Manufacturing Association. It sets standards for consumer products and electronic components. has forecast the average retail price of natural gas in the American north-east in the winter of 2006/07 at $14.17 per MCF, down from $16.75/MCF in the winter of 2005/06, $12.87/MCF in the winter of 2004/05, $11.77 in 2003/04, $9.99 in 2002/03, $9.41 in 2001/02 and $10.01 in 2000/01. The EIA forecast the average retail price of heating oil in the north-east in the winter of 2006/06 at $2.47/gallon, compared to $2.45/g in the winter of 2005/06, $1.93/g in the winter of 2004/05, $1.46 in 2003/04, $1.42 in 2002/03, $1.18 in 2001/02, and $1.44/g in 2000/01 (For the front-month and forward prices of WTI WTI West Texas Intermediate WTI Western Transportation Institute (Montana State University) WTI World Tribunal on Iraq WTI With The Idea (used in chess to point to the idea behind a specific move) on NYMEX see omt18-OPEC-NOPECreviewOct30-06). Natural gas is the most widely used winter heating fuel in the US, taken by 58% of all American households. American industrialists warn that, while prices are to be lower than in the past winter, there is a natural gas crisis in the US which has affected most sectors of the economy. More than 100,000 jobs have been lost in the chemicals sector alone and millions of people are at risk due in large measure to current federal energy policies. Powerful industrial and energy lobbyists are counting on the Nov. 7 mid-term elections for a new Congress to enact measures to lower the costs of natural gas, heating oil and other fuels. Typically, natural gas prices in the US north-east - which has direct effect on NYMEX energy futures, in turn affecting energy prices worldwide - bottom in the late summer, then rally in the autumn as traders begin focusing ahead of the peak-demand winter heating-season. This time, however, there have been no hurricanes (to compare with the Katrina and Rita disasters in late August/September 2005) and the last winter was unusually warm. Since sliding to a four-year spot chart low of $4.05/m BTU when the October contract expired on Sept. 27, the front-month November contract has been in a mostly steady uptrend uptrend A series of price increases in a security or in the general market. Some investors believe a security tends to take on a certain inertia; as a result, these investors search for stock in an uptrend, thinking that it will probably continue to move in . Cooler weather forecasts first backed the move upwards, but then technical buying kicked in as several resistance points were breached including the 40-day and 200-day moving averages. But while the front-month price on Oct. 26 hit a high of $7.929/m BTU, the longer-term downtrend downtrend A series of price declines in a security or the general market. Many analysts feel that investors should avoid securities in a downtrend until the pattern is broken. Compare uptrend. was still intact after prices peaked above $15 in December 2005, with market experts questioning how much upside was left. |
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