Weekly Update 12/26/16

Nat Gas Price Discussion (Source: CME):

The week of 12/21 saw the price of NG fluctuate between 3.242 and 3.715, closing at 3.662 up .247 week-over-week.

Mar/April spread closed at .135 cents, up .054 week-over-week.

Feb volatility was up 3.55% week-over-week to 53.5%.

The 2017 Calendar (Cal17) settle at 3.538, a new 12-month high.

Nat Gas Weekly News:

Big moves in Dec: According to EIA, this was the biggest December natural gas stock withdrawal in EIA history (1994).  The substantial storage draw is related to a combination of cold weather, increased electric-sector capacity for natural gas, reduced natural gas production relative to last year, and increased natural gas export volumes.

 Storage Update: According to EIA, working gas stocks (at 3,597 Bcf) are 2% above the five-year average for this week and 6% below last year at this time.

Rig Count Update: According to EIA, NG rig count up by 3 to 129 for week, while Canadian gas rigs up 4 to 116.

Money managers getting bullish on NG: According to Seeking Alpha, money managers short position in NG futures-plus-options decreased further week-over-week and now is at a seven-year low. Money managers net length on NG also increased by another 0.2 Tcf on top of a 1.1 Tcf increase during the previous two weeks. While there has been sizable movement in positions, money managers' long position is materially below the peak levels achieved during the cold winter season of 2013/2014.

Energy Policy News:

Offshore FreezeAccording to Bloomberg, Obama made a late (yet telegraphed) move last week when he banned new offshore oil and gas development in more than 100 million acres of the U.S. Arctic and undersea canyons in the Atlantic Ocean. In an announcement coordinated between two of the world’s biggest oil producers, Canada committed to freeze new offshore leasing in its waters and review the matter every 5 years.

 Don’t Assume Trump Can Reverse: While a number of Obama’s climate-related executive actions will likely be reversed under a new regime, the offshore oil ban may not be one of them. From Bloomberg: “Presidents have modified decisions from predecessors to indefinitely withdraw areas from drilling but have never rescinded them altogether. It’s not clear they would have the power to. A legal opinion from the U.S. attorney general in 1938 on similar designations under a different law said they “do not imply a power to undo.” And there have been no federal court rulings on the offshore energy statute.”

 Icahn on RFS: Last week it was announced Carl Icahn will have an unpaid regulatory advisory role in the Trump Administration.  According to Politico, in the energy world, “Icahn has been focused mainly on a single regulation: The obligation that refineries have to bear the brunt of complying with the Renewable Fuel Standard. Icahn has a majority stake in independent refiner CVR, and he believes the RFS will put him and other East Coast refineries out of business. The appointment only muddies the waters further on Trump's view toward the program, given he tapped big-time RFS proponent Iowa Gov. Terry Branstad to become his ambassador to China, a country expected to import more ethanol in coming years, and he told the Iowa governor his EPA pick will support the program.”



Any market recommendations, market reports and/or other information (collectively "Market Information") regarding futures contracts, swaps contracts, forex contracts and options thereof (collectively “Commodity Interests”) that are provided by DPLCC are based upon information obtained from sources believed by DPLCC to be reliable. Market Information may be: (i) based solely on the opinion of DPLCC; (ii) incomplete; and/or (iii) unverified. DPLCC makes no representation, warranty or guarantee as to, and shall not be responsible for, the accuracy or completeness of any Market Information furnished to you.  Further, changes in market conditions may affect the Market Information provided to you by DPLCC.  Please note that Market Information does not account for transaction costs, such as commissions, or slippage. Actual trades made in reliance on any price contained in Market Information will result in transaction costs and may incur slippage, which will adversely affect the value of the trade.  Please contact DPLCC for firm bids and offers regarding any Commodity Interest that you may execute through DPLCC. This is a solicitation to enter into a Commodity Interest transaction.

Trading futures contracts, swaps contracts, forex contracts and options thereof (collectively “Commodity Interests”) involve substantial risk and are not appropriate for everyone. Past performance is not indicative of future results. Unless specified, any communication by Donnelly Partners LLC ("DPLCC) should NOT be regarded as an offer to buy or sell or as a solicitation of an offer to buy or sell, any Commodity Interest through DPLCC. This e-mail and any attachments are intended only for the individual and/or company to whom it is addressed and may contain information which is privileged, confidential and prohibited from disclosure or unauthorized use under applicable law. If you are not the intended recipient of this e-mail, you are hereby notified that any use, dissemination, or copying of this e-mail or the information contained herein this e-mail is strictly prohibited by the sender.