Natural Gas Report: Flashpoint Firtash

March 28, 2014 05:27 AM


The limitations of U.S. natgas export capacity make it impossible for the Obama Administration to use natural gas as a lever against Vladimir Putin. Russian supplies are strong and readily available with infrastructure to boot and the sendout price to Ukraine has already been raised. But Russian-U.S. tensions have a new flashpoint in Ukrainian businessman and natural gas mogul, Dmitryo Firtash.

Firtash was recently arrested in Austria at the behest of U.S. officials who would like to question Firtash for what amounts to suspicion of racketeering in the U.S. He has posted bail to the tune of 172 million dollars, but authorities in Austria are still holding Firtash while they confirm where that money came from.

Firtash, who was reportedly a friend of the ousted Yanukovych regime and has close ties with Kremlin dealings, owns four nitrogen production plants in Ukraine and accounts for nearly all of the nitrogen produced in Ukraine. Firtash has been instrumental in natural gas price negotiations. It is not out of the scope of possibility that an extradited Firtash would be seen by Putin as a political prisoner in the United States and because of his dealings in Russian natural gas, could be Putin's excuse for shutting off gas supplies to Ukraine and parts of the E.U.

  • Inventories stand at 869 Billion cubic feet (Bcf) -- 50.1% below year-ago and 50.8% below the five-year average.
  • This week notes a 57 Bcf net withdrawal from storage.
  • Storage draws were above expectations of 53 Bcf. index


May '14 natural gas opened today at $4.51 3/4 -- 14 cents above last week's Natgas Report. Bulls will target $4.73 and $5.20. Support lies at $4.35 along the way to $4.25 and the January low at $3.85.

The average temperature in the continental United States during the report week was 43.1°F -- that's 0.3°F above the same time last year and 1.7°F above the 30-year average temp.

Prices --

"The Nymex near-month (April 2014) contract settled at $4.484/MMBtu last Wednesday, and settled yesterday at $4.402/MMBtu, a decrease of 8.2 cents/MMBtu. The April contract decreased by 11.5 cents/MMBtu last Thursday, before increasing slightly through trading yesterday. The 12-month strip (the 12 contracts between April 2014 and March 2015) fell by 5.7 cents/MMBtu, from $4.559/MMBtu last Wednesday to $4.502/MMBtu yesterday," according to EIA.

Consumption --

"Average natural gas consumption increased for the second week in a row, by 1.9%, to 81.4 Bcf/d. Increases occurred in all sectors except industrial. Despite seasonal, spring-like temperatures last Friday, which lowered total natural gas consumption to 71.6 Bcf on that day, the return of cooler temperatures over the weekend led to increased total U.S. consumption, which reached 87.6 Bcf yesterday. Overall, residential and commercial consumption rose 1.4% this week. Consumption of natural gas for power generation increased by 5.5% over last week, rising in every region except Texas. Net natural gas exports to Mexico increased by 6.8%, while average industrial consumption decreased by 0.3%," according to EIA.

Indicated text provided by EIA.

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