WEEKLY ENERGY MARKET UPDATE:
Friday (12/14) energy settlements:
Natural Gas: Jan '08-$7.025
Jan-Mar '08-$7.12
Summer '08-$7.39
One Year Strip-$7.46
Last week's close was very weak with the Jan. contract settling below a trendline that has provided support for the life of that contract. Without a rally this week, Jan seems destined to trade lower. Judging by the enormous increase in open interests, there is a very large bear spread play going on with substantial long positions in summer '08 gas and accompanying shorts in Jan-Mar '08 which should help to drive down the prompt month price.
This December rally was the smallest percentage run up in the history of the NYMEX at only 8%. Two previous diminutive rallies were in '97 and '04 at 11%.
If the Q1 percentage decline from the Q4 high matches the average of the past 5 years, we'll have a low that is very close to the one we had last year. While you need to have your triggers in place to buy some future gas, a bottom near the end of January looks more likely from a technical perspective than it does in the next 10 days, but stay ready since no one will "ring the bell" to tell us when the bottom has arrived.
Please feel free to call me to discuss any questions you may have about your specific energy plan.
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