If you are simply interested in checking the NYMEX price, this has been a pretty uneventful week. But if you’re interested in the story behind the price, there have been some interesting developments this week…with a touch of conspiracy theory mixed in for good measure.

On the face of it, this week saw the latest uptick in NYMEX prices gradually fade in the face of market fundamentals which offered absolutely no support.Huge supply. Little demand. Sluggish economy sending mixed signals. Nothing drastic on the weather front. Today’s storage report came in marginally under estimates…the overall storage numbers continue to pad their record-setting pace…and the NYMEX only blinked. The past week has been an easy, gentle slope downward. Situation normal.

Behind the scenes, however, we have been tracking some interesting stories centering around the United States Natural Gas ETF. Unless you have a taste for the esoteric financial instruments that got us into our current economic mess, you’ve probably never heard of them. ETF in this case stands fro exchange-traded fund. These funds are ways for people to play around with commodities (in this case, natural gas) in much the same way that people used to play around with American mortgages. We mentioned them peripherally in a previous post about the NYMEX price jumps we have seen at the end of recent months.

The reasons that UNG is getting so much attention are twofold. First, a lot of big money investors are directing a lot of their big money into UNG. Second, there are indications that UNG is currently responsible for up to one-third of all open NYMEX contracts. That’s right: one third of NYMEX contracts potentially being controlled by one entity with very specific interests that have nothing to do with heating or cooling your building.

Still just a few stories. We’ll see if more follow.

Next week moves us from June to July: let’s see whether or not NYMEX and the fundamentals mesh as a new front month comes up. At Cost Containment, we keep tabs on everything that affects your energy future, so you can bet that we’ll be watching with keen eyes.

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Another week, another rally based on…nothing much.

Later today, the Potential Gas Committee will release a report affirming that yes, the United States has almost a century’s worth of proven, recoverable reserves. Speculation has already begun as to what this means for international reserves, since the drilling techniques that have lead to this substantial increase (depending on which figures you use, America’s reserves are 33% to 48% higher than they were at the last report four years ago) are only beginning to be implemented around the world.

Nonetheless, NYMEX picked this week to hold a sustained rally above $4.00, rising as high as $4.33, for no discernible reason whatsoever. There was considerable speculation….in other words, speculation about speculation…but no solid reasoning. New confidence in the economy? Perhaps. Assumptions that natural gas will eventually follow oil pricing, as it has in the past? Perhaps. Market tricks aimed at short-term recoups? Perhaps.

As of this writing, the rally is wilting a bit in the face of the hefty injection from today’s storage report, but is resisting the precipitous drop we have seen, and enjoyed watching, on past Thursdays. Just like NYMEX to spoil our fun. Did they read last week’s newsletter and become self conscious about these storage report reactions? Perhaps.

We’ve said this before: in today’s NYMEX, fundamentals aren’t enough.Indeed, investors appear to be doing their best to ignore the fundamentals while they chase that elusive Sign That The Economy Is Better. Every week, some believe they have found it. And every week, it seems, this belief is becoming a bit more resilient to the facts that contradict it.

And it plays up once again that anyone trying to time the bottom for natural gas prices is playing a risky game. All of the indicators point towards a continued downward trend before a rebound in 2010. We’re just not sure the market is paying attention to the indicators anymore.

These are some choppy seas. Cost Containment is the best way to smooth your ride.

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There’s really no other way to say this: nothing much happened this week.

Prices bounced around within a fairly narrow range all week. Today’s weekly storage report came in a few Bcf under expectation, and the price is currently up to around $4.00, but this reaction can be considered knee-jerk at this point. By the beginning of next week, it will drift down, after which it will most likely spend a few days…bouncing around within a fairly narrow range.

All indications continue to point to a gradual downward trend as we head into summer, although the direst precitions have not yet actually materialized. There will, no doubt, continue to be short-term overraction to anything resembling good news (Raymond James stating on Tuesday that the 2009 natural gas market was “hosed” does not fall into this category), but for the moment, discussing the NYMEX natural gas price has taken on all the drama of the San Diego weather report. Today was in the mid-60s and partly cloudy. The rest of the week? Mid-60s and partly cloudy.

It’s likely that investors have turned their attention to where the action is: oil. The oil markets have rebounded nicely (if you happen to be an investor or a producer…less so if you drive a car) in the last few weeks. Anyone who doubts the decoupling of the energy markets should check out the divergence in the past month. Two very different stories.

We are even seeing indications that the reliable link between natural gas and electric rates may be doing a bit of decoupling as well. We have seen some local ratcheting up of electric rates, despite the even path of natural gas. It’s too early to tell if this is a trend or not, but it bears watching. The eventual effect on eletric rates of the proposed Cap and Trade legislation, which is currently mired in congress, will add a new level of complexity to what was once a very predictable relationship.

So there is still plenty to keep the energy markets interesting. We’re keeping our eyes open.

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We’ve got a new favorite reality TV show: waiting for the weekly natural gas storage report to be released at 10:30 on Thursday morning, then heading over to the live NYMEX feed to watch the market’s reaction. Since we check a 15-minute update, we have to wait until 10:45, but the results for the past few months have been consistently entertaining.

Last week, a report that was a whopping 3% below expectation, coupled with a small downward revision of overall reserve levels, resulted in price liftoff at 10:45. This rally held up through Tuesday, then tumbled, which muted the response to today’s higher than expected injection. But down the price goes, nonetheless. It should settle back to around where it was before last week’s rally by end of day.

It’s interesting watching how a country which is increasingly looking at the world through a timeframe based on Twitter and two-minute Youtube videos is dealing with the fact that the economic downturn is not going away just because we’ve all become bored with it. While the signs and the trends are clearly pointing up, we’re not there yet. We are probably not going to be “there” for quite a while.

People continue to face layoffs, housing prices continue to drop, and GM is not the last company that will file for bankruptcy this year. All of these downward trends have slowed considerably, but it’s going to be a while before we replace the dreaded “r”-word (recession) with the eagerly anticipated “r”-word (recovery).

Meanwhile, the impatience in the natural gas commodity market is palpable. They jump, they come to their senses, then they turn around and do it all over againg.

There are plenty of indicators that gas, like the economy, hasn’t quite bottomed out yet. There are plenty of respected voices saying we will see the other side of $3.00 before the year is out. Which means our favorite new guilty pleasure should be continuing to entertain all the way through 2009. Don’t touch that dial!

At Cost Containment Intl., we’re content to watch others jump the gun. Our goal for you is a long term plan designed to secure your long term future. We all know where slow and steady get you. Give us a call.

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That’s the correct Jeopardy question to the answer: “The lifetime during which the United States will run out of natural gas.”

In other words, we’ve got a lot of it. We may very well have more than a lot of it.

At least, we think we do. Until we develop the ability to see through solid rock, we can only estimate how much natural gas lies underground within the United States. This is why figures that you will see published are complex and often contradictory, because most people have a strong vested interest in presenting the figure as being either high or low, and there are many different sets of figures to choose from. We have discussed the complexities of this issue in a previous post, which you can read here.

Basically, the question of how much domestic natural gas we have comes down to a combination of three sub-questions: do we have geologic proof that it’s there, or are we just guessing; if we have proof, do we have the technology right now to get it out; and if we have the technology, does the current market allow us to actually put up wells and started producing profitably? Depending on how many “yes” answers you expect, the figure you end up with is very different. This is why you will hear people categorizing their totals using terms like “undiscovered recoverable resources.”

Here, in a nutshell, are the current best estimates.

If you’re going to hold your total to the highest possible standard, the United States has enough proven, recoverable reserves for the next ten years, assuming current usage.

If you’re willing to stretch your standard to include all the gas we know we can get at, that figure stretches to between eighty and one hundred and twenty years.

If you’re willing to stretch a bit farther, and assume that we will continue to improve our technology, the figure stretches into thousands, and perhaps even tens of thousands, of years.

Why are these figures so different? Because our whole conception of how we mine for natural gas has changed radically in the past decade. New drilling technologies now allow us to remove natural gas from geological formations that were previously thought impossible to tap.

The most important are shale deposits and coal gas deposits, particularly shale. We have only scratched the surface of what these new resources can produce. And it’s notable that most of these new resources are located throughout the lower 48 states, in fairly close proximity to existing pipelines.

The wild card, which might extend natural gas reserves beyond the foreseeable future, is a source we don’t yet know how to tap: huge deposits of frozen methane trapped under the ocean and the ice of Alaska. The potential here dwarfs all previous natural gas sources…indeed, all previous sources of all the fossil fuels.

This is bad news to a lot of people. For natural gas producers, it speaks of continued ample supply and, as a result, continued low prices. For green energy supporters, it takes some of the shine off the argument that fossil fuels are running out. And for investors, it raises doubts that they will see a repeat of the profits they took in the first half of 2008.

But let’s not forget: supply is only half of the equation when it comes to price. And future demand for natural gas, both domestically and internationally, is another question with many possible answers. It remains to be seen how the emerging economies of Asia and South America will rebound from the current economic downturn, and which energy source will fuel this rebound.

There are also many questions about the role natural gas will play, above and beyond it’s current usage, in America’s energy future. Will it power our cars? Will it replace coal as a way to reduce emissions for generating electricity?

We’ll keep you posted.