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Prices up on EIA report

Natural gas prices climbed above $3.00 per MMBtu yesterday for the first time since mid-January. Natural gas prices jumped about 4.1% to as high as $3.02 Thursday, following the release of the Energy Information Administration’s (EIA) report on weekly natural gas storage.

The EIA report showed a natural gas injection of 111 Bcf for the week ended May 8, 2015, slightly below expectations. EnerCom’s Natural Gas Roundup for the week ended May 8 shows an average prediction for 114 Bcf of injections. The smaller than expected injection helped to keep total inventories 2% below the five-year average, totaling 1,897 Bcf.

Natural gas price

Source: Bloomberg NG1 Commodity Price Since the Beginning of the Year

Too much, too fast

“For me, the rally in natural gas is too strong, too rapid,” said Alessandro Gelli, analyst at Diapason Commodities Management SA, which manages about $4 billion in assets. The firm has stayed out of natural gas bets because the market has become too difficult to read, he told The New York Times.

The sudden spike in natural gas prices was followed by some selloff, with prices dipping below $3 Friday before coming back up. “Prices are overvalued and are currently becoming more susceptible to a downside correction,” Dominick Chirichella, analyst at the Energy Management Institute said. At the time of this article’s writing, natural gas prices were up slightly at $3.017 per MMBtu.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.