An honest-to-God weak injection, well below projected levels, on today’s weekly storage report has left NYMEX…pretty much where it started. Two weeks of steady price rise led up to a quick spike this morning, but since the report was released at 10:30am EST NYMEX has dribbled downward. There should be a bit of a pickup, and we’d expect NYMEX to end the day around $4.80.

Some people are saying that the country has been in a worlds of hurt since the economic collapse in 2008, but for July, 2010, NYMEX was a world of shorts. We started the month just under $5.00, a tailoff after a week at $5.20 back in June, and clearly nobody thought that would last. After a fairly precipitous drop, July has seen a slow and steady progress upward, almost entirely unaffected by storage reports, economic reports, or anything else.

Most likely, we’ve seen two straight weeks of short covering: investors who bet that the $5.00 price that opened the month wouldn’t hold, and invested accordingly, then gradually bought their way out as prices bottomed and started to inch up. If you’ve bet short, it all becomes a game of chicken as prices rise and the month’s close gets closer and closer: at what point do you settle for your gain…or take your lumps…and get out? This appears to have been the NYMEX story for July.

In other words, the price of gas right now has nothing to do with the price of gas. It’s all about investors trying to outsmart each other. As we’ve said before, the fundamentals have remained unchanged since last year: plentiful supplies, low demand (with occasional weather-related spikes), weak economny. Based on supply, prices are high no matter where they are in the up-and-down fluctuation that has marked NYMEX all year. Storage has fallen off since last year’s records, but let’s remember: front-month futures were selling for almost a full dollar less at this time last year, with spot prices even lower. Right now, there’s very little to suggest that banking your gas now will gain you anything other than a lot of unnecessary storage fees. The fact that injections continue at near-record levels despite this says that there’s plenty of natgas to go around.

Meanwhile, NYMEX will continue to play its games. That’s the long and the short of it.

Cost Containment International president Hans Herrmann spent this past weekend up in Walworth County, Wisconsin, at the first annual EcoFair360. C2 was a primary sponsor of this three-day celebration of all things green, which brought more than 2,000 attendees together with hundreds of exhibitors and presenters. Cost Containment International had a booth in the sponsor tent, and Mr. Herrmann gave two separate presentations.

He also picked up a little something for dinner.

What you see here is (perhaps) the future of the one-pot meal. This is a SUN over, an oven which cooks exclusively using the energy from the sun. It’s an old concept, as anyone who has used a magnifying glass to start a fire knows. With the SUN oven, reflective panels focus and concentrate the sun’s rays into a central cooking chamber, where it can easily hit and maintain temperatures of 350° and higher. Look closely and you can see the dutch oven in the chamber.

Dinner in this case was chicken, and reports are that it was both well done…and done well.

We’ll start by saying that the weekly storage report came in on the low end of projections, with a 51 Bcf injection, and that storage lost ground to both last year’s record levels and the five-year average. What else is new?

NYMEX is pretty much standing pat. The market opened the day jumping up fifty cents, to $4.63, and it seems poised to end there as well.

Once again, NYMEX is bucking conventional logic. The reports have been consistent over the past two months, enough to convince even the most skeptical investor that supply and demand have pretty much hit parity. Further proof can be found in the spot market, which has risen to equal footing with the futures market…in fact, at the moment, it is even slightly higher. Summer is still hot, the Gulf is awaiting its next major storm, supply is clearly in check. This would be a good time for another run about $5.00.

It does not appear, however, that NYMEX is in the mood for another run. NYMEX appears to be in the mood to stay right where it is for the moment.

Cold feet again? Probably. NYMEX’s push above $5.00 back in June resulted in a substantial backslide, which only reversed itself in time for last week’s post. Since then, trading has been active, but the overall market has been stable. At this point the market has held steady for slightly more than a week…if the trend of the past few months holds, we are due for our next jump any day now. With more than a month left in what could well be the hottest Summer on record, we’d expect that to be a jump up. But for the moment, where it’s at is where NYMEX is at.

Apologies to our readers for the missed posts over the past two weeks. We’ve been busy with in-house business that required pretty much constant attention. But now we’re back.

And we missed all the fun. NYMEX spent the past three weeks losing its nerve.

When we last checked in, NYMEX was in the midst of a brief flirtation with +$5.00 pricing. A slightly sub-expectation weekly report had just sent it below the $5.00 mark. It has been downhill ever since. Yesterday, NYMEX scraped $4.30 for the first time since this rally began almost six weeks ago. Today, a slightly sub-expectation weekly report is giving speculators an excuse for a bit of a rebound.

We’d love to tell you what happened while we were busy…so we will. Nothing. Conditions in the market have held pretty much steady since this whole thing began. The weather continues to be hot throughout most of the country. Oil is still spewing into the Gulf, and the Obama Administration is still pushing for a six-month moratorium on deepwater drilling. The hurricane season has yet to have any impact on production. The economy continues to send mixed, muted signals about a recovery that still has not really started. And the weekly storage report continues to come in a few Bcf below projections, losing ground to last year’s record levels but still more than 10% above the 5-year average. 

We could have reported these facts at any point in time over the past several months…we have, in fact. Yet NYMEX has seen fit to rise and fall by almost a full dollar over this same period of time.

If we follow the patterns of the last few months, we look for NYMEX to hold steady for the next few days at its current, post-report level of $4.60. There’s been a fits-and-starts quality to the market lately: big jumps in either direction are followed by several days of relative calm, then another big jump. Which means you can relax for a couple of days, but then keep your eyes open. You wouldn’t want to miss the fun.