4-23-07 Energy Update

WEEKLY ENERGY MARKET UPDATE:

Friday (4/20) energy settlements:
May NYMEX gas: $7.381
Summer: May-October ’07: $7.70, Winter ’07-’08: $9.31
The NYMEX one-year strip $8.40, 2-year strip $8.48, 3-year $8.40
(Bid and Ask for these strips vary greatly)
Last 12-month average NYMEX: $6.64, Last Summer: $6.33
Last winter: $7.16
May Crude oil expired: $63.38, #2 oil $1.83

Natural gas prices moved lower last week even as the EIA reported an April withdrawal from storage. Technical support is just under $7.25/Dt. We are in a good area to purchase additional May gas.

Two daily price gaps remain in the natural gas chart, one near $6.50 and another near $7.70. That seems exemplary of the volatility ahead for us, as the bulls and bears have clear targets before them.For the past two years, gas has traded lower during the month of May and with lots of gas in storage and mild weather in Europe to keep LNG flowing into the US, the fundamentals are in place for the June contract to trade lower after May expires this Thursday, but aggressive buyers shouldn’t get too greedy. Strong gasoline and crude prices will be supportive of the entire sector.

Add to your summer positions when the front month trades between $7.33 and $7.25 and keep triggers in place to buy further out if the front month should trade to $6.50.

Norway’s Snovhit LNG liquefaction facility will begin operation by end of 2007 with 240,000 DTs per day dedicated to Cove Point.

The American Geophysical Union, which publishes the “Geophysical Research Letters”, will release a short paper this Wednesday with an opinion that global warming will create upper atmosphere wind shear similar to that caused by El Nino that could reduce the number of hurricanes that form in the Atlantic Basin.

Fun fact: Meeting our future energy needs will require many alternative sources. Using photovoltaics alone, the US would require 17% of the planet's entire surface area, or 59% of the land to replace its current daily oil consumption. The entire world would require 40% of the entire planet's surface are, or 1.37 times the entire land area.

Nano technology developments in the petroleum industry may be equivalent to discovering another super giant field. Cleaner, more efficient diesel fuels are a growing priority for nano researchers. One company is already testing a nanoscale additive that can increase mileage up to 10% and reduce emissions. Others are working on cleaning up the diesel refining process. Researchers are in the early stages of developing solid nanocatalysts that can filter out harmful corrosives more efficiently and trap them for environmentally safer disposal.Here’s another reason we must support higher education at virtually any cost.

Please feel free to call me to discuss any questions you may have about your specific energy plan.