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“The Southwest’s Low Cost Natural Gas Leader”
Weekly Market Summary – May 9, 2012
Natural gas continues to rebound as some traders covered short positions near yesterday’s close. Technical support and increased coal-to-gas switching led to the short-covering rally that may attempt to squeeze out more of the shorts. The EIA released its Short-Term Energy Outlook yesterday and projects 2012 natural gas demand from the power sector will rise 21% from last year’s level. They revised their production and storage projections slightly downward from last month but still expect record levels for both in 2012. Gas in storage currently sits at 2.576 TCF, 840 BCF higher than last year and 857 BCF higher than the 5-year average. According to Baker Hughes the natural gas rig count dropped by 7 last week to 606 rigs, almost 32% below last year. Crude oil futures fell below $96 today on pressure from falling global equities and a strengthening US dollar. The US dollar is currently trading at $1.295 against the euro. In this morning’s crude inventory report, crude oil inventories rose by 3.7 million barrels versus an expected build of only 2 million barrels. Gasoline stocks fell by 2.6 million barrels against an expected drop of only 600,000 barrels. Distillates fell by 3.3 million barrels versus an expected draw of 100,000 barrels.
| Natural Gas Futures | ||||||||||
| Jun12- | Nov12- | Apr13- | Nov13 | Crude Futures | ||||||
| Jun | Change | Oct12 | Mar13 | Oct13 | Mar14 | Cal13 | Cal14 | Jun | Change | |
| 02-May-12 | $2.253 | ($0.118) | $2.415 | $3.180 | $3.405 | $3.826 | $3.433 | $3.852 | $105.22 | ($0.94) |
| 03-May-12 | $2.340 | $0.087 | $2.488 | $3.254 | $3.478 | $3.892 | $3.505 | $3.913 | $102.54 | ($2.68) |
| 04-May-12 | $2.279 | ($0.061) | $2.431 | $3.212 | $3.444 | $3.863 | $3.471 | $3.883 | $98.49 | ($4.05) |
| 07-May-12 | $2.336 | $0.057 | $2.483 | $3.272 | $3.496 | $3.912 | $3.524 | $3.929 | $97.94 | ($0.55) |
| 08-May-12 | $2.393 | $0.057 | $2.534 | $3.318 | $3.536 | $3.952 | $3.566 | $3.963 | $97.01 | ($0.93) |
| Historical One-Year Forwards – NYMEX Only - May Comparables | ||||||||||
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 |
| $4.013 | $5.746 | $6.281 | $7.247 | $9.061 | $8.612 | $11.504 | $5.451 | $4.983 | $4.516 | $3.012 |
| EIA Storage Data (in Bcf) | ||||||
| 4/27/12 | 4/20/12 | Chg | Yr Ago | 5-Yr Avg | 5-Yr Diff | |
| East | 1,165 | 1,145 | 20 | 695 | 740 | 425 |
| West | 371 | 362 | 9 | 231 | 264 | 107 |
| Prod | 1,040 | 1,041 | (1) | 810 | 715 | 325 |
| Total | 2,576 | 2,548 | 47 | 1,736 | 1,719 | 857 |
| Storage Estimate for Week Ending 05/04/12 - 32 Injection. | ||||||
The market information above is believed to be reliable, however, Sierra Southwest does not warrant its completeness or accuracy.
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Depending on the amount of natural gas you use, you may have a choice in natural gas providers. And that choice can save your business thousands of dollars each year in energy costs. Medium and large commercial and industrial gas customers can save thousands of dollars each year by purchasing their natural gas on the open market rather than at government-regulated prices. And if you have a choice in natural gas service providers, why not choose one that can save you money and give you, the customer, membership in the company? Why not choose a natural gas provider that offers the best energy solutions for your organization and lets you have a voice in the way the natural gas company is run? Dozens of natural gas companies can provide you with the energy services your business requires. . .but Sierra Southwest is the only cooperatively owned natural gas provider serving both the core and non-core western natural gas markets.
Sierra works with our small and large business customers to help them understand the natural gas markets and can assist with securing natural gas supply under several pricing options such as index based, fixed price, fixed basis or NYMEX + basis. Our pricing desk is available daily to provide customers with real time market information and analysis. Sierra also distributes weekly gas market updates to our customers. Our goal is to keep our customers informed with the data they need to make the best decisions and to take advantage of available market opportunities when purchasing natural gas supply.
Sierra works with many different types of businesses such as core-aggregators, manufacturing plants, hospitality and health care institutions, laundry and textile, food processing and educational institutions just to name a few. Whether you have one meter or many meters spread across different LDC service areas, Sierra can help you better manage your overall natural gas supply costs.
Sierra is the Southwest’s Most Reliable Natural Gas Provider. We have the experience and expertise to provide our customers with the most reliable and competitively priced natural gas supply around. Our scheduling desk manages our customer gas pools in the most efficient and cost-effective manner possible which minimizes or avoids any service disruptions as a result of utility-called emergency operational flow orders or other pipeline restrictions.
