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The April natural gas wholesale exchange contract bounced off support today and traded up over $4.00 and settled slightly above that level on moderate volume settling at $4.005 on the day, up $0.133. The question is whether or not we have started to turn around given that our beloved market tends to have an upward price bias due to consumer’s, utilities and speculator’s understanding that the industry needs to start to replenish their storage caverns commencing in April. The natural gas market thus becomes a self-fulfilling prophecy in that it will tend to have higher prices in this time period. However, though this time around natural gas open interest is near or at record levels and our sister fuel, crude oil is at atmospheric levels, thus might give more credence to a price lift. However, the weather leads us to believe that any rally will be short lived as above too much above average temperatures blanket the country for the next 6 to 15 days. But the open interest is still very high and when the crowd begins to turn, it doesn’t matter what the fundamentals say.
On the electricity front this morning, advocates for consumers and big business were up in arms Thursday after a proposal to fund a consultant to represent their interests at the New York Independent System Operator was rejected through secret ballot. NYISO is a North Greenbush nonprofit agency that oversees the state's high-voltage transmission grid and the state's wholesale electricity market. As part of its governing structure, NYISO has a wide range of "stakeholders" who vote on rules and regulations to run NYISO. Stakeholders include power plant owners, utilities, the environmental community, business owners and consumer advocates such as the state Consumer Protection Board. In recent years, NYISO has come under fire from political leaders and consumer advocates for not being transparent and for not addressing the needs of consumers, who ultimately fund its operations.
The number of rigs drilling for natural gas in the United States rose for the first time in four weeks, up by one to 906, oil services firm Baker Hughes said on Friday. The gas-directed rig count had dropped in nine of the previous 11 weeks, but remains above the 12-month low of 902 hit on Jan. 14. Horizontal rigs -- the type most often used to extract oil or gas from shale -- fell by three from last week's record high to 981.
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