Trading Jenga: Gas Jumps into a New Trading Zone?

Gas storage inventory levels have significantly increased and temperatures remain very hot. Electricity generated with natural gas surpassed electric supply created from coal. This emerging trend will continue for the foreseeable future and permanently impact natural gas demand in North America.

Will natural gas and NYMEX exit the current $2.60 to $2.80 per MMBtu trading zone? Is the natural gas big price movement found in delivery point trading to capture value through basis differentials? Yes. Margins widened for delivery points other than the Henry Hub. This points to great opportunity for those with strong analysis skills and interruptible transportation or storage.

The NYMEX basis differential between the front month at the Henry Hub and NatGas Dec ’17 is about $.57. This seems low for trading purposes and should widen quickly with shut-in production of natural gas from hurricanes after the eighth named storm in the Gulf of Mexico.

Natural Gas climbed towards $2.99 per MMBtu on July 1st and retreated back into the earlier trading zone. Have transportation limited upward pressure northeast prices? Basis variance for Henry Hub cash prices and Marcellus widened! The differential peaked over $1.30 per MMBtu and retreated to a $1.21 per MMbtu spread. This important delivery point value may not control current cash pricing due to the large number of Marcellus E&P bankruptcies. This pricing shift will last until oil prices reach or exceed $66 per barrel.

©2016 ALL RIGHTS RESERVED Rebecca Stone

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About the Author

Dr. Rebecca Stone earned a MBA in Finance from the University of St. Thomas in Houston, a Masters Degree from the Texas Health and Science University in Austin, BBA from the University of Texas at Austin, and a foreign Medical Degree in Alternative Medicine. Her medical writing includes over three hundred articles about medicine, wellness, energy, finance, trading, endangered species, green living, renewable energy, and alternative medicine. She has written three medical books available online. SpeedyReads publishes book written by Dr. Rebecca Stone, including The New Drone Juggernaut ©2015, Quantum Brain Healing ©2011, Quantum Orthomolecular Medicine ©2011, and Horny Goat Weed, the Magic Chinese Herb ©2015. The most recent book will be available in Spanish in the near future at Barnes & Noble.

Her current status at AMAZON for the Kindle book Horny Goat Weed, the Magic Chinese Herb ©2015 reached the top 5% of paid book sales for it’s medical category. Dr. Rebecca Stone also wrote The Undersea Adventures of Aladin and Alibaba.

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