Welcome to injection season. Today’s storage report announced the first injection of the new year, and NYMEX has responded by dropping below $4.00, though only by a small margin. We won’t be looking for another withdrawal any time soon. And we’re looking to see whether breaking into the $3.00 range will be enough to cause NYMEX to find support.

Meanwhile, gas at the pump hangs tough at $2.89.

The weekly storage report will now become the barometer for the market. With supply plentiful into the foreseeable future, and demand looking to be consistently tepid for the rest of the year, look for large injections as a signal that people are buying and storing. Of course, if you’re bottom-watching, following the storage reports amounts to being a day late and a dollar short…but you know what we think of bottom-watching.

But an interesting thing is happening to NYMEX, something we saw at the end of last year right before NYMEX started the rally that carried it through the Winter. Futures prices stretching all the way to November are starting to fall into line…a nice, straight horizontal line this time. If the trend continues, we’re heading towards consistent futures prices all the way to the beginning of next Winter.

Which points to 2010 being a year when you, the energy consumer, need Cost Containment International more than ever. Because a consistent futures prices points to a stable natural gas market, and a natural gas market without the market plays that were traditionally available during more volatile times means providers are going to start tightening up their offers. The market isn’t going to give them the opportunities of past years, which is going to make them risk-averse in the plans they offer to consumers. You’re going to need Cost Containment’s expertise to get the savings you want.

And we’re going to need to dig to find interesting stories to tell every week, because the immediate picture for natural gas looks pretty sedate. Luckily, we live in interesting times.

We live in times when something that’s happening in New Mexico might have a substantial impact on your energy future.

Several things happened this week, including permission from The Federal Energy Regulatory Commission to set transmission rates, that pointed towards the Tres Amigas Superstation project getting underway in New Mexico. When complete, Tres Amigas will become the nexus that turns America’s three electric grids…the Western Interconnection, the Eastern Interconnection and the Texas Interconnection…into a single, national grid.

And that might just be the push that reignites green energy in America.

Why would an electric station in New Mexico make a difference for green energy? Because green energy on a national scale, whether its from wind farms or solar assemblies, is going to be generated far away from the cities and industrial sectors where it will be used. The wind farms of the future will be located across the empty great plains, in mountain passes of the Rockies, and out at sea, while solar assemblies will be located in the desserts and open prairie. A single, national grid will make it easier for green generators to sell their electricity wherever it’s needed, which isn’t possible in a country that’s currently divided into three geographic sectors. Once Tres Amigas gets final approval and construction begins, look for the currently moribund green energy industry to start coming back online.

We’ll keep you posted.

It’s conceivable we’re seeing our last withdrawal of the season. Today’s storage report showed a modest withdrawal of just 11 Bcf, substantially below projections. Weather reports are starting to include some words that folks here in the Midwest haven’t seen in a while: “temperatures in the 60s.” NYMEX, after pausing for a few days following last week’s report, is again seeking support. It looks to end the day perilously close to breaking below $4.00.

Meanwhile, gas at the pumps is pushing upward. Gas is going to break $3. But will it be gas at the pump heading up, or natural gas futures on NYMEX heading down, that get there first?

Reviewing the business sections and the financial blogs, we’re noting these days that analysts have finally come to a consensus on a point we at Cost Containment International made several months ago: that any connection between oil and natural gas price movement is a thing of the past. Better late than never, we suppose. Oil prices continue to show the volatility of a complex international commodity, while natural gas is more and more reflecting the basic fundamentals of domestic supply and demand in what is, for the moment, a fairly nonvolatile economy.

And supply is beyond plentiful, with no end in sight. With the next 12 months of NYMEX futures prices stretching out in an almost straight line…and the line heads nowhere but up…expect storage to swell as soon as wiser heads decide that price support has been hit. Despite the low prices, rig counts are starting to rise significantly, fed in part by substantial interest from Big Oil. Pretty much across the board, the major oil companies are increasing investment in natural gas companies and natural gas fields. The thirst for shale gas is being whetted by improved production techniques that are bringing drilling costs down.

Meanwhile, the EPA announced their first study into the effects of hydrofracking, the key technique behind shale gas, on local water tables and water sources. Its a sure thing that the big coal producers, with their strong support in Congress, would like to see natural gas get a black eye from the environmental impact standpoint. While 2010 is shaping up as a fairly uneventful economic year, we might get some political theater out of it before we’re done. We’ll keep you posted.

NYMEX continues it’s drift towards a support price, which appears more and more likely to be in the $4.40 range. The downward trend of the past few weeks is tapering, suggesting the bottom for the moment has been hit. Today’s storage report, which announced a withdrawal of 111 Bcf…right at predicted levels…reflects the general mood that things are finally settling down.

The big question is: now what?

The big indicators: nothing much for a while.

You’re starting to see an interesting thing happen in discussion of the natural gas markets: people have discovered the future. Analysts are starting to talk about developments in the gas market using a timeframe that spans years, even decades, instead of months. A bit of a problem for us, since we have to find something interesting to write about every week, but potentially very good news for you as the energy consumer. Because this means long-term stability is the way of the future for natural gas. Not the immediate future, mind you. But the future.

We speculated that 2010 would be a decisive year for natural gas. This seems less likely now. The forces that are shaping the natural gas market are moving more deliberately. But they are major forces, and the changes taking shape are still transformational ones.

We’ve talked a lot about shale gas and what it’s done to the American natural gas market and the American energy picture, transforming a resource that most people thought was on the verge of being tapped out into and almost inexhaustible supply.

The thing is, shale is everywhere. There has been very little exploration on the other continents to discover what their shale gas reserves are: Europe, Asia, South America and Africa are largely undiscovered territory when it comes to shale gas. And while this kind of talk is highly speculative, some speak of the possibility that every country on the planet has enough domestic reserve of natural gas locked in shale to meet its needs, without imports, for the next few decades. Which means energy free of geopolitical turmoil, international economic trends, and anything beyond national supply and demand. Small wonder Exxon/Mobil announced this week that they expect natural gas, not oil, will produce the lion’s share of its growth in the coming years.

It’s a brave new world, and at Cost Containment, we’re looking forward to it. Stable natural gas prices, free of the short-term market plays the current price volatility allows, will mean more conservative standard offers. Customers looking for the deals we specialize in will need Cost Containment’s expertise more than ever. So we embrace this brave new world. That smell is the smell of success.

Meanwhile, a seismologist in Texas has released a report suggesting that “fracking” from shale wells around Dallas contributed to several minor earthquakes in the area. Hotly disputed, needless to say. The issue of shale gas and the environment isn’t going to get any less interesting any time soon.

A fairly modest withdrawal in today’s storage report…at 116 Bcf, it was more than 10% below predicted levels…is sending NYMEX very close to the $4.50 level. We’re heading into Spring pricing, and the steady downward trend of the last few weeks is showing no sign of abating. The next few weeks should show where the support will be as we move out of Winter demand with storage tanks still well-filled and no sign of a ramp up in the economy in the near future.

The next twelve months on NYMEX currently look like a straight line heading up through January of next year, which means we should expect storage levels to start rebounding as soon as buyers decide that support has been hit and buy cheap gas to store and sell in the future. At that point  things should settle down for a while.

Or…we’re about to bounce back to perhaps as high as $5.15. Depends on who you believe.

There was an interesting article stuck in the middle of the expected reports on weather and storage levels and the downward trend, care of the good folks at Bloomberg. The above figure is being bandied about by a fairly well-respected analyst. Apparently, NYMEX prices are about to bounce back up after hitting the Bollanger Band.

What’s the Bollanger Band? It’s a 20-day moving average with projected upper and a lower limit to the trading range. Combined with stochastics and the relative strength index indicators, it all points to NYMEX surging back in the near future.

Trust me, I don’t talk like this in real life. But these kind of reports are part of the everyday reality of NYMEX, and part of the reason natural gas prices move the way they do. Tools like Bollanger Bands and stochastics are based entirely on trader psychology, not supply and demand or the ebb and flow of the energy market. In short, as we head into a new year, the forces that made things go so wacky in 2008 are still very much at play. Who you believe is up to you.

Check the NYMEX