LONDON (Commodity Online): The US gas market gave back about half of yesterday's storage-driven rally. The front of the curve gave back six cents, to close at $3.58 per MMBtu.
Losses thinned out the curve, as calendar 2012 was down five cents, to $3.80, and calendar 2013 slipped one cent, to $4.41.
The weather outlook turned slightly warmer in the near term, but slightly colder for next week out through the 15-day forecast. The Baker Hughes report showed another nine-rig drop in the gas-directed count, marking a multi-week run of greater-than-expected pullbacks in drilling.
The rig count has never been correlated with short-term prices, so the market is left to ponder the reason for the fall-off.
With an inventory of drilled and uncompleted wells and supply outperforming our outlook anyway, this drilling pullback is not yet a bullish indicator, we argue.
Cash markets continued to tumble heading into the weekend, as near-term demand is no match for bulging storage. Basis is tight at most points. Henry Hub slumped 14 cents, to $3.35. New York (Transco-Z6) fell 30 cents, to $3.63. SoCalBorder dropped 15 cents, to $3.50.
