Global Weekly

13 October 2009

Important Notice: The circumstances in which this publication has been produced are such that it is not appropriate to characterise it as independent investment research as referred to in European MIF directive and that it should be treated as a marketing material even if it contains a research recommendation (« recommandation d’investissement à caractère promotionnel »).

US Natural Gas Drivers
Editorial Natural Gas Price Information 2 4
US NATURAL GAS SCOREBOARD
Score Market Fundamentals U.S. Demand Res/comm Industrial - US Economy Power generation (EG) U.S. Supply Domestic Production Canadian Imports LNG Inventories (Storage) Short-term expectations Long-term expectations Market signals Laurent Key
+1 212 278 57 36 laurent.key@sgcib.com

Weight 60% 40% 55% 35% 10% 30% 60% 20% 20% 30% 40% 60% 40% 20% 20% 40% 20% 100%

Comment Neutral: unexpected rise in production will offset stronger residential demand. Expected colder than normal temperatures in the Northeast and the Midwest are the only bullish factor. Up 2 Bcf/d last week with cool temperatures. The rising trend in res. demand should continue with expected colder than normal temps in high consuming area. Stable w/w but still more than 1 Bcf/d below pre-crisis levels. The seasonal decline in EG demand is compounded by less price-related coal-to-gas switching. Production is already back to H1 '09 levels, due to the combined effect of a strong cash market and pipelines returning from maintenance. A two-week increase of 1.4 Bcf/d, to 56.4 Bcf/d, as Gulf pipeline maintenances finish ahead of schedule. Current spot prices above $3.5 may result in increasing shale gas production for Oct. Rising Southeast output may already be offsetting depressed Rockies production. Down 0.3 Bcf/d last week, on increased domestic demand and declining production. Slightly up last week by 0.3 bcf/d. The completion of global liquefaction facilities, and rising US spot margins, will boost imports to more than1 Bcf/d for the coming winter. Bullish short-term on injection reports; bearish for the medium-term. Cold weather decreases daily injections: Thursday's EIA report expected at 54 Bcf . Next week in the 30-40 Bcf range, respectively 5 Bcf and 25 Bcf below the 5-yr average. Since domestic production may have plateaued at high levels, we expect a tighter supply-anddemand balance by end-of-March 2010. Neutral since inv. Levels will still be high. Bearish short-term, bullish medium term. As of last week, funds are longer by 5,000 contracts. Total Open Interest is unchanged. With prices range bound at $4.8-4.9 , ATM vol. may end its decline and stay around 60%. A strong bearish skew on the Nov '09 contract. Bearish short-term, bullish medium term on a possible reverse head and shoulder pattern. Rising energy markets may provide a support to NG, but no clear correlation for the moment. A looser supply and demand balance may weigh on prices for the short term. However, flattening production adds a bullish skew for the medium term.

2.9 3.1 4 2 2 2.0 1 5 2 3.4 4 3 2.6 3 1 3 3 2.8

Natural Gas Price Information & Supply/Demand Balance 5 Supply Components Demand Forecasts Demand Breakdown & Inventory Inventory & Withdrawal Weather Technical Analysis NatGas 6 7 8 9 10 11

US Natural Gas Forecasts - Last updated 25/09/09 12 Economic Indicators Trading Contacts 13 16

Hedge Funds Implied Probability Technical Analysis Global markets THIS WEEK TREND

Stephanie Aymes
+44 207 762 58 98 stephanie.aymes@sgcib.com

www.commodit www.commodities.sgcib.com

bearish Scoring: 1 = strongly bearish 2 = bearish 3 = neutral 4 = bullish 5 = strongly bullish

Important Notice: In relation to European MIF directive, this publication could not be characterised as independent investment research. Please refer to disclaimer on last page.

EDITORIAL

Editorial

A fundamentally bear market, but only for the short term. Two Southeast supply area pipelines, recently back from maintenance, have boosted output to Q1 ’09 highs. Total US dry NG production jumped to 56.4 Bcf/d from 55 Bcf/d by the end-ofSept. The two pipelines, Fayetteville and Greenville laterals, bring natural gas from the Woodford and Fayetteville shale plays to the Texas Gas system for exports to the Midwest and Mid-Atlantic consuming areas. The the Arkoma (Arkansas – Oklahoma) basin flow – which include the Woodford shale and part of the Fayetteville shale - has jumped 0.7 Bcf/d from Sep 27. It now sits at 2.6 Bcf/d as of yesterday. About 60% of the total Arkoma basin gross production can be monitored with this sample, so the increase in output in this region may in fact be more than 1 Bcf/d. This increase in production is bearish for the short-term, until more winter demand rebalances the market. The total count of drilling application permits for September suggests that the US output should remain steady for the next month and then start rising again, though at a slower pace than by H2 ‘08. This contradicts SG research’s previous forecast of a mid-December 2009 rebound. Arkansas horizontal drilling permit application count peaked in August 2009 at 152 and was down to 114 for September. After 12 days in October, the count sits at 52, suggesting that total October applications may reach August levels. This increase will be reflected in total Fayetteville shale output as early as midNovember. The situation is similar to Louisiana’s Haynesville shale: Drilling application count peaked at 70 in July and fell by 43% in August. It remained steady m/m for September at about 40. It now sits at 22

after 12 days in October, possibly the first application count increase since last summer. The Rockies and Pennsylvania are the only areas to have increases in horizontal drilling permit applications for September. The one exception is Colorado, where September permit application count is down to 72 from 534 in July ’09. Colorado production should continue to head south for the near term – mainly due to concerns over the environmental cost of shale extraction. The Rockies remain the region most hurt by the 2009 price decline, due to higher marginal production costs than in the rest of the US.
Southeast horizontal drilling application count
Ar - Vertical 350 300 250 200 150 100 50 0 Mar-08 La - Vertical Ar - Horizontal La - Horizontal

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Source: ZDM, Inc, SG Commodities Research

Overall, US production is now expected to remain at high levels, since increases in Southeast and Pennsylvania output will offset decreases in the Rockies. Nov ’09 prices should then correct to the downside, despite the expected below-normal temperatures for the next 11 days. The resulting increase in residential demand should impact the cash market, not futures, but at least will keep storage facilities from high congestion-related pressure issues.

2

13 October 2009

US Natural Gas Drivers

EDITORIAL

A tighter supply-and-demand balance should arise later in the winter, after the market: 1/ experiences the first withdrawals of the heating season, and 2/ gets a better view of Canadian imports. The November temperature forecast is seasonal, which will spur a consequent y/y increase in residential demand due to the – slowly improving economy. In Canada, cold weather and rising rig count suggest the start of the winter drilling season. In a few weeks, the market will have a better idea of how much depletion in conventional production fields is hurting total Canadian output. For the short-term, Asia and Europe will remain the main spot LNG buyers, until a 2010 rebound in US imports. Given the current large contango along the curve, the expectation for this tighter winter supply-and-demand balance may already be priced in levels along the curve. To benefit from the expected medium term tighter S/D balance, SG Research recommends buying the March/April spread (Buy March, sell April) – at the right time of course: The spread fell to 0 cents too early in the season, and then bounced back to 5 cents with the September rise on the front of the curve. With the October looser supply and demand balance, it is expected to fall back to below 0 cents. We see this move as a buying opportunity since the spread will have to return to high positive levels to encourage withdrawals, as winter gets underway.

Mar/April 2010 Spread (USD/MMBtu)
0.1 0.08 0.06 0.04 0.02 0 -0.02 -0.04 Jul-09
Source: NYMEX, SG Commodities Research

Daily Close

Aug-09

Sep-09

US Natural Gas Drivers

13 October 2009

3

NATURAL GAS PRICE INFORMATION

Natural G as Price I nformation

Natural Gas Prices and Basis (US$ per MMBTU)
Price $ 16 $ 14 $ 12 $ 10 $8 $6 $4 $2 $0 Jan-08 Sep-07 Nov-07 Henry Hub Spot Henry Hub Nearby Futures Basis Spread $2 $1 $1 $0 -$ 1 -$ 1 -$ 2 -$ 2 -$ 3 -$ 3 Jul-09 Sep-09

Competing Fuels & Nat Gas Prices (US$ per MMBTU)
$ 35 $ 30 $ 25 $ 20 $ 15 $ 10 $5 $0 Jan-07 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-08 Jan-09 Heating Oil (Upper) Residual Fuel Oil (Lower) Price Range NYMEX Natural Gas Price

COT Data and Nearby Futures Prices (US$ per MMBTU)
'000 lots 100 50 0 -50 -100 -150 -200 -250 -300 -350 Futures & Options Nearby Price $ $ $ $ $ $ $ $ $ 16 14 12 10 8 6 4 2 0

Jul-08

Sep-08

Nov-08

Jan-09

Mar-08

Mar-09

May-08

May-09

Source: NYMEX, SG Commodities Research

Source: NYMEX, SG Commodities Research

Source: US CFTC, NYMEX, SG Commodities Research

Volatility Forecasts
SG Vol Model Hist. Vol Impl. Vol

Implied Volatility
90 80 70 60 50 40 30 20 NOV09 NOV10 NOV11 NOV12 AUG10 AUG11 MAY10 MAY11 MAY12 AUG12 FEB10 FEB11 FEB12 Last Week Current Last Month

by Probability Price end at this range by end of Nov
20% 15% 10% 5% 0% $5.45 to $5.75 $5.75 to $6.05 $6.95 to $7.25 $3.05 to $3.35 $3.35 to $3.65 $3.65 to $3.95 $3.95 to $4.25 $4.25 to $4.55 $4.55 to $4.85 $4.85 to $5.15 $5.15 to $5.45 $6.05 to $6.35 $6.35 to $6.65 $6.65 to $6.95 Current Last Week

200 160 120 80 40 0 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09
Source: Bloomberg, SG Commodities Research

Source: Bloomberg, SG Commodities Research

Source: SG Commodities Research

4

13 October 2009

Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09
US Natural Gas Drivers

NATURAL GAS PRICE INFORMATION & SUPPLY/DEMAND BALANCE

Natural G as Price I nformation & Supply/Dem and B ala nce

Spread NBP (UK) - Henry Hub (US) (US$ per MMBTU)
Latest Last Week Last Month

Forward Curves
9 8 7 6 5 4 Latest Last Month Last Week

US, UK + Shipping Natural Gas Prices (US$ per MMBTU)
UK 16 14 12 10 8 6 4 2 0 Jun-09 Oct-08 Jan-09 Jul-09 Aug-09 Nov-08 Dec-08 Mar-09 May-09 Sep-09 Feb-09 Apr-09 Oct-09
5

US

UK + cost of shipping

4.0 3.0 2.0 1.0 0.0 -1.0 Aug-10 Aug-11 Aug-12 Nov-09 Nov-10 Nov-11 Nov-12 Feb-10 Feb-11 Feb-12 May-10 May-11 May-12 Feb-13

3 NOV09 SEP10 JUL11 MAY12 MAR13 JAN14 NOV14

Source: NYMEX, SG Commodities Research

Source: Bloomberg, SG Commodities Research

Source: NYMEX, SG Commodities Research

(Bcf/d) Supply and Demand (Bcf/d)
SG Supply Estimate SG Demand Estimate

Net Supply and Demand
2006-2007 2007-2008 2008-2009

Demand in Bcf/d (w/o Bal. Items w/o Mexican Exports)
2006-2007 2007-2008 2008-2009

65 55 45 35 25
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

30 20 10

75 65 55 45

0 -10
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

35 25
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

US Natural Gas Drivers

13 October 2009

SUPPLY COMPONENTS

Supply Compo ne nts

Supply (Bcf/d, incl. netting of Mexican Exports)
2006-2007 2007-2008 2008-2009

Domestic Production (Bcf/d)
2006-2007 2007-2008 2008-2009

Net Imports (Bcf/d)
2006-2007 2007-2008 2008-2009

65 63 61 59 57 55 53 51 49 47
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

53 51 49 47 45 43 41 39 37
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

16 14 12 10 8 6
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

Net Imports from Canada (Bcf/d)
2006-2007 2007-2008 2008-2009

LNG Sendout (Bcf/d)
2006-2007 2007-2008 2008-2009

Rig Counts
North America 2000 1600 1200 US Canada

12 11 10 9 8 7 6 5 4
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

4 3 2 1 0
20-Jun 20-Jul 20-Aug 20-Sep 20-Oct
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

800 400 0
20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09
Source: Baker Hughes, SG Commodities Research

6

13 October 2009

US Natural Gas Drivers

DEMAND FORECASTS

Dema nd Forec asts

LNG Sendout by Location (MMcf/d)
3000 2500 2000
Everett Sabine Pass Lake Charles Elba Island Excelerate Cove Pt

Lower 48 States (Observed) Demand Forecast (Bcf/d)
2008 Demand 2009 Demand Forecast

(Bcf/d) NorthEast (Observed) Demand Forecast (Bcf/d)
2008 Demand 2009 Demand Forecast

11

42
9

1500 1000 500 38

7 5

0 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09

34 29-Sep

4-Oct

9-Oct

14-Oct

19-Oct

24-Oct

29Sep

6Oct

13Oct

20Oct

Source: Bentek Energy LLC, SG Commodities Research

Source: Bentek Energy LLC, SG Commodities Research

Source: Bentek Energy LLC, SG Commodities Research

SouthEast (Observed) Demand (Bcf/d)
2008 Demand 2009 Demand Forecast

(Bcf/d) Gulf (Observed) Demand (Bcf/d)
2008 Demand 2009 Demand Forecast

Midwest (Observed) Demand (Bcf/d)
2008 Dem and 2009 Dem and Forecast

13

8

6 5
12

7

4 3
11

6

2 1
10

5 29-Sep

4-Oct

9-Oct

14-Oct

19-Oct

24-Oct

0 29-Sep

9

4-Oct

9-Oct

14-Oct

19-Oct

24-Oct

29-Sep

4-Oct

9-Oct

14-Oct

19-Oct

24-Oct

Source: Bentek Energy LLC, SG Commodities Research

Source: Bentek Energy LLC, SG Commodities Research

Source: Bentek Energy LLC, SG Commodities Research

Natural US Natural Gas Drivers

13 October 2009

7

DEMAND BREAKDOWN & INVENTORY

Dema nd Brea kdown & I nv entory

West (Observed) Demand (Bcf/d)
2008 Demand 2009 Demand Forecast

Power Demand (Bcf/d)
Power 2006 Power 2008 Power 2007 Power 2009

Industrial Demand (Bcf/d)
Industrial 2006 Industrial 2008 Industrial 2007 Industrial 2009

12
35

20 19

11
25

18 17

10

15

16

9 29-Sep

5

15
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

4-Oct

9-Oct

14-Oct

19-Oct

24-Oct

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: Bentek Energy LLC, SG Commodities Research

Source: Bentek Energy LLC, SG Commodities Research

Source: Bentek Energy LLC, SG Commodities Research

Residential/Commercial Demand (Bcf/d)
Res/Comm/Bal 2006 Res/Comm/Bal 2008 Res/Comm/Bal 2007 Res/Comm/Bal 2009

US Working Gas Inventory (Bcf)
2004-2008 Range 2008 4 000 3 000 2 000 2004-2008 Average 2009

Eastern Region Gas Inventory (Bcf)
2004-2008 Range 2008 2 500 2 000 1 500 1 000 2004-2008 Average 2009

70 60 50 40 30 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: Bentek Energy LLC, DOE EIA, SG Commodities Research

1 000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DOE EIA, SG Commodities Research

500 0 Jan FebMar AprMay Jun Jul Aug Sep Oct NovDec
Source: DOE EIA, SG Commodities Research

8

13 October 2009

US Natural Gas Drivers

INVENTORY & WITHDRAWAL

Inve ntory & Withdra wal

Western Region Gas Inventory (Bcf)
2004-2008 Range 2008 500 400 300 200 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DOE EIA, SG Commodities Research

Producing Region Gas Inventory (Bcf)
2004-2008 Range 2008 1 400 1 200 1 000 800 600 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DOE EIA, SG Commodities Research

Total Lower 48 States Injection/Withdrawal (Bcf)
2004-2008 Range 2008 150 100 50 0 -50 -100 -150 -200 -250 -300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DOE EIA, SG Commodities Research

2004-2008 Average 2009

2004-2008 Average 2009

2004-2008 Average 2009

Producing U.S. Region Injection/Withdrawal (Bcf)
2004-2008 Range 2008 100 50 0 -50 -100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DOE EIA, SG Commodities Research

Eastern Region Injection/Withdrawal (Bcf)
2004-2008 Range 2008 100 50 0 -50 -100 -150 -200 Jan FebMar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DOE EIA, SG Commodities Research

Western U.S. Region Injection/Withdrawal (Bcf)
2004-2008 Range 2008 30 20 10 0 -10 -20 -30 -40 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: DOE EIA, SG Commodities Research

2004-2008 Average 2009

2004-2008 Average 2009

2004-2008 Average 2009

US Natural Gas Drivers

13 October 2009

9

WEATHER

We ather

Actual v Normal HDD in U.S.
Normal HDD 250 200 150 100 50 0 Jun-07 Jun-06 Jun-08 Sep-07 Dec-07 Aug-09 Aug-08 Nov-08 Mar-07 Sep-06 Dec-05 Dec-06 Feb-09 Mar-06 Mar-08 May-09 Actual HDD

Actual v Normal CDD in U.S.
Normal CDD 140 120 100 80 60 40 20 0 Jun-07 Jun-06 Sep-07 Dec-07 Jun-08 Aug-08 Aug-09 Nov-08 Mar-07 Dec-05 Sep-06 Dec-06 Mar-06 Mar-08 Feb-09 May-09 Actual CDD

Heating/Cooling Demand Forecast (U.S)
% Difference from Normal 70 60 50 40 30 20 10 0 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct

Source: Bloomberg, SG Commodities Research

Source: Bloomberg, SG Commodities Research

Source: Dominion Energy Index, Dominion

Heating/Cooling Demand Forecast - Central
% Difference from Normal
Great Lakes Great Plains Lower Mississippi

Heating/Cooling Demand Forecast - Eastern
% Difference from Normal
Mid-Atlantic New England South Atlantic

Heating/Cooling Demand Forecast - Western
% Difference from Normal
Pacific Rocky Mountains Southwest

200 150 100 50 0 -50 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct

450 400 350 300 250 200 150 100 50 0 -50 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct
Source: Dominion Energy Index, Dominion

80 60 40 20 0 -20 -40 -60 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct
Source: Dominion Energy Index, Dominion

Source: Dominion Energy Index, Dominion

10

13 October 2009

US Natural Gas Drivers

TECHNICAL ANALYSIS NATGAS

ch nic al Analysis NatGas

NATURAL GAS NYMEX Technical Analysis Snapshot Last week at a glance…. NAT.GAS OCT09 rallied higher than the third target at 4.42 We turn OCT09 4.42. neutral and analyze the NOV09 contract. NOV09

TECHNICAL ANALYSIS SNAPSHOT

NAT.GAS NOV09

Next 3 months :
Direction Resistances Supports STOPSTOP-LOSS

8, 8.70/8.80 2.40, 1.95
6.726.72-3.62/50

Next 3 weeks :
Direction Sentiment & Conviction 3 taking profit Resistances 2
nd rd

3
6.20 5.85 5.50

taking profit

1st taking profit Strengthening level Buying level

5.13/5.20 STOPSTOP-LOSS 4.35/4.25 Selling level Strengthening level 1st taking profit Supports 2nd taking profit 3rd taking profit NAT. GAS NOV09 Graphic elements 5.13-4.25 5.50 Indicators -14-day RSI Elliott count 6.72-3.50 Neutral between 5.13/20 and 4.35/4.25 Key graphic levels at 4.25 and 5.13/5.50 Possible bullish pattern (Inverse Head and Shoulders) Tops of May/June They hit key resistances and are at support Hit the long-term resistance but is testing the support at 50% Range Are the limits to watch
Expected direction - bullish then Risk/Reward = expected gain / known risk = (1st taking profit - buying level) / (buying level - stop-loss) Expected direction - bearish hen Risk/Reward = expected gain / known risk = (selling level - 1st taking profit) / (stop-loss - selling level) Expected direction - sideways Sentiment & Conviction 1: Very Bearish then Risk/Reward = Not Available 3: Neutral 4: Bullish 5: Very Bullish

3.87 3.62 3.50 4.56 USD /MMBtu NA

Last price Risk/Reward
Source: SG Commodities Research

2: Bearish

US Natural Gas Drivers

13 October 2009 11

US NATURAL GAS FORECASTS - LAST UPDATED 25/09/09

US Natur al Gas Forecasts - L ast updated 2 5/0 9/0 9

SG US Natural Gas Price Past/Forecasts
Henry Hub Spot Natural Gas Wellhead Price Residential Sector Commercial Sector Industrial Sector
Source : Forecast : SG Commodities Research - Actual : DOE EIA data

US$/MMBTU US$/MMBTU US$/MMBTU US$/MMBTU US$/MMBTU

2008 9.1 8.1 15.2 12.5 9.6

1Q 09 4.48 4.14 11.60 10.15 6.23

2Q 09 3.93 3.53 12.22 9.29 4.99

3Q 09 3.33 2.97 12.04 7.47 4.01

4Q 09 3.75 3.24 9.38 7.64 4.52

2009 3.87 3.44 11.25 8.57 4.89

1Q 10 5.13 4.36 9.82 8.59 5.89

2Q 10 5.80 5.15 12.61 9.96 6.40

3Q 10 6.63 5.93 18.19 11.89 7.17

4Q 10 6.25 5.47 12.57 10.50 6.99

2010 5.95 5.23 13.32 10.23 6.60

SG US Demand forecasts (Bcf)
Total US Res/Comm Sector Industrial Sector Electricity Sector
Source : Forecast : SG Commodities Research - Actual : DOE EIA data

2008 63.5 8.6 18.2 18.2

1Q 09 71.88 38.03 17.54 16.31

2Q 09 46.74 12.15 16.16 18.44

3Q 09 48.55 7.22 16.20 25.13

4Q 09 63.69 29.47 17.67 16.55

2009 57.72 21.72 16.89 19.11

1Q 10 75.31 40.01 18.65 16.65

2Q 10 48.03 11.87 17.68 18.49

3Q 10 49.92 7.90 17.08 24.94

4Q 10 64.71 30.22 17.75 16.74

2010 59.49 22.50 17.79 19.20

Supply SG US Supply forecasts (Bcf)
Dry Gas Production Net Imports of Natural Gas Working Gas Storage (end of period)
Source : Forecast : SG Commodities Research - Actual : DOE EIA data

2008 55.1 8.1 2837

1Q 09 56.91 7.88 1668.00

2Q 09 56.91 6.76 2775.00

3Q 09 56.25 7.78 3738.00

4Q 09 55.88 7.31 3102.00

2009 56.49 7.43 3102.00

1Q 10 55.34 8.21 1524.00

2Q 10 55.38 7.06 2395.00

3Q 10 55.73 8.93 3288.00

4Q 10 56.05 8.29 2744.00

2010 55.63 8.12 2744.00

12

13 October 2009

XXXXXX YYYYYYYY

ECONOMIC INDICATORS

Economic Indi cators

Economic indicators
GMT Period Last SG Fcst Cons

US

During the week CH Actual FDI YTD (% YoY) Foreign Exchange Reserves, USD Money Supply - M2 (% YoY) New Yuan Loans, bln JN IN SW US NZ BOJ to Hold Regular Policy Board Meeting Monday12-OctMonday12-Oct-2009 Industrial Production (% YoY) AMV Unemployment Rate, % Treasury's Krueger Speaks to Economists in St. Louis Retail Sales (% MoM) Retail Sales Ex-Auto (% MoM) Tuesday13-OctTuesday13-Oct-2009 CH UK JN Business Climate Index Entrepreneur Confidence Index BRC Retail Sales Monitor (00:01 BST) RICS House Price Balance, % (00:01 BST) Bank Lending (% YoY) (00:50 BST) Bank Lending Banks (% YoY) (00:50 BST) Money Stock M2 (% YoY) (00:50 BST) BoJ Monetary Policy Meeting FR Consumer Price Index (% MoM) Consumer Price Index (% YoY) CPI - EU Harmonised (% MoM) CPI - EU Harmonised (% YoY) CPI Ex Tobacco Index Current Account, EUR bln SP SW UK House transactions (% YoY) CPI - Headline Rate (% MoM) CPI - Headline Rate (% YoY) Core CPI (% YoY) CPI (% MoM) CPI (% YoY) DCLG House Prices (% YoY) RPI (% YoY) RPI Ex Mort Int.Payments (% YoY) GE Zew Survey (Current Situation) 23:01 23:01 23:50 23:50 23:50 4:00 6:45 6:45 6:45 6:45 6:45 6:45 7:00 7:30 7:30 8:30 8:30 8:30 8:30 8:30 8:30 9:00 SEP SEP SEP SEP SEP AUG AUG SEP SEP SEP SEP SEP AUG SEP SEP OCT 0.5 -0.2 0.6 -0.2 118.41 -1.2 -20.3 0.2 -0.8 1.8 0.4 1.6 -8.3 -1.3 1.4 -74 -0.1 -0.2 0.0 -0.2 118.35 na na na na na 0.1 1.1 na na na -68 -0.1 -0.2 0.0 -0.3 na na na 0.4 -1.4 1.7 0.2 1.3 na -1.5 1.2 -68.3 3Q 3Q SEP SEP SEP SEP SEP 10.7 1.8 1.9 2.8 na na na na 2.9 15.0 1.7 115.9 110.2 na na na na 8:00 17:00 21:45 21:45 AUG AUG -0.5 -0.5 na na 0.5 0.5 AUG SEP 6.8 5.4 na na 9.7 5.4 SEP SEP SEP SEP -17.5 2131.61 28.5 410.4 na na na na na na 28.4 420.0

Zew Survey (Econ. Sentiment) White House's Romer Speaks to Economists in St. Louis Fed's Kohn Speaks to Economists in St. Louis New York Fed's Dudley Speaks to International Bankers in NYC ABC Consumer Confidence

9:00 12:30 17:00 17:15 21:00

OCT

57.7

50

59.0

OCT-11

-45.0

na

na

US Natural Gas Drivers

13 October 2009 13

ECONOMIC INDICATORS

Economic indicators
GMT Period Last SG Fcst Cons

AU JN

Wednesday14-Oct-2009 Wednesday14-OctCH Exports (% YoY) Imports (% YoY) Trade Balance, USD bln JN BOJ Target Rate, % Domestic CGPI (% MoM) (00:50 BST) Domestic CGPI (% YoY) (00:50 BST) Consumer Confidence Consumer Confidence Households SP Consumer Price Index (% MoM) Consumer Price Index (% YoY) CPI (Core Index) (% MoM) CPI (Core Index) (% YoY) CPI (EU Harmonised) (% MoM) CPI (EU Harmonised) (% YoY) NO UK Existing Homes (% QoQ) Avg Earnings ex bonus (% 3M/YoY) Avg Earnings inc bonus (% 3M/YoY) Claimant Count Rate, % Claimant Count Change, K ILO Unemployment Rate (% 3mths) Manu.Unit Wage Cost (% 3M/YoY) EUR US Euro area Ind. Prod. s.a. (% MoM) Euro area Ind. Prod. w.d.a. (% YoY) MBA Mortgage Applications Advance Retail Sales, % Retail Sales Less Autos, % Retail Sales Ex Auto & Gas, % Import Price Index (% MoM) Import Price Index (% YoY) Business Inventories, % Minutes of Sept. 23 FOMC Meeting NZ Consumer Prices (% QoQ) Consumer Prices (% YoY) Thursday15-OctThursday15-Oct-2009 15 Bank of Italy Releases Quarterly Economic Bulletin House Price Index (% QoQ) 23:50 23:50 5:00 5:00 7:00 7:00 7:00 7:00 7:00 7:00 8:00 8:30 8:30 8:30 8:30 8:30 8:30 9:00 9:00 11:00 12:30 12:30 12:30 12:30 12:30 14:00 18:00 21:45 21:45 3Q 3Q 0.6 1.9 na na 0.8 1.1 SEP SEP SEP SEP SEP SEP SEP SEP SEP SEP F 3Q AUG AUG SEP SEP AUG AUG AUG AUG OCT-9 SEP SEP SEP SEP SEP AUG SEP SEP SEP -23.4 -17 15.70 0.1 0.0 -8.5 40.4 40.1 0.3 -0.8 0.1 0.4 0.4 -0.8 5.3 2.2 1.7 5 24.4 7.9 4.3 -0.3 -15.9 16.4 2.7 1.1 0.6 2 -15 -1 na na na 0.1 na na na na -0.2 -1.0 0.1 0.3 -0.3 -1.0 na 1.9 1.2 5.1 25 8.3 na 3.5 -12.4 na -1.3 0.3 0.2 na na na -21 -15.0 -17.00 0.1 0.1 -7.9 41.3 na -0.3 -1.0 na na -0.2 -1.0 na 1.9 1.4 5.1 25.0 8.0 na 0.8 -15.8 na -2.1 0.2 na 0.2 -11.6 -0.8

House Price Index (% YoY) RBA Governor Stevens Speaks in Perth (00:30 BST) Capacity Utilization (% MoM) Industrial Production (% MoM) Industrial Production (% YoY) BOJ Monthly Report

3Q 23:30 4:30 4:30 4:30 5:00 6:00 8:00 8:00 8:00 8:00 8:00 8:00 9:00 9:00 9:00 12:30 12:30 12:30 12:30 12:30 12:30 12:30 14:00 SEP OCT SEP F SEP F SEP F SEP F SEP SEP SEP SEP SEP SEP SEP SEP OCT-3 OCT-10 OCT OCT AUG F AUG F AUG F

-8.2

na

na

3.9 1.8 -18.7 3.3 0.3 0.1 0.2 0.1 24.9 1.3 0.3 -0.2 0.4 -1.5 0.1 1.4 521 18.88 14.1

na na na na -0.2 0.2 0.6 0.3 na 1.3 0.1 -0.3 0.3 na 0.1 na na 18.00 14.0

na na na na -0.2 0.2 0.6 0.3 na 1.2 0.1 -0.3 0.2 -1.4 0.1 1.4 525 18.00 12.0

EUR IT

EU 25 New Car Registrations, % ECB Publishes Monthly Report CPI (NIC incl. tobacco) (% MoM) CPI (NIC incl. tobacco) (% YoY) CPI - EU Harmonized (% MoM) CPI - EU Harmonized (% YoY)

NO EUR

Trade Balance, NOK bln Euro area CPI - Core (% YoY) Euro area CPI (% MoM) Euro area CPI (% YoY)

US

Consumer Price Index (% MoM) Consumer Price Index (% YoY) CPI Ex Food & Energy (% MoM) CPI Ex Food & Energy (% YoY) Continuing Claims, K Initial Jobless Claims, K Empire Manufacturing Philadelphia Fed. Friday16-OctFriday16-Oct-2009 BOJ Governor Masaaki Shirakawa to Speak in Tokyo Retail Sales (Real) (% YoY) Trade Balance (Total), EUR mln Trade Balance Eu, EUR mln Current Account, EUR mln

JN SZ IT

6:35 7:15 8:00 8:00 9:05 9:00 9:00 11:00 11:00 11:00 11:00 13:00 13:00 13:15 AUG AUG AUG AUG AUG AUG SEP SEP SEP SEP AUG AUG SEP 1.0 4107.0 2397.0 3334.0 12.6 6.8 0.1 1.6 0 -0.8 15.3 -97.5 69.6 na na na na na na na na na na na na 70.0 na na na na na na 0.1 1.3 0.0 -0.9 na na 69.7

EUR CA

Euro area Trade Balance, EUR bln Euro area Trade Balance s.a., EUR bln Bank Canada CPI Core (% MoM) Bank Canada CPI Core (% YoY) Consumer Price Index (% MoM) Consumer Price Index (% YoY)

US 3Q -1.9 na na

Net Long-term TIC Flows, USD bln Total Net TIC Flows, USD bln Capacity Utilization, %

IT SP

14

13 October 2009

US Natural US Natural Gas Drivers

ECONOMIC INDICATORS

Industrial Production, % U. of Michigan Confidence

13:15 14:00

SEP OCT P

0.8 73.5

0.3 75.0

0.1 73.5

US Natural Gas Drivers

13 October 2009 15

TRADING CONTACTS

Trading Conta cts

COMMODITIES RESEARCH Head Head Dr. Frederic Lasserre Paris Carbon & Coal Dr. Emmanuel Fages

COMMODITY MARKETING Head Xavier Lannegrace Paris Energy energy.paris@sgcib.com Metals, Steel base.paris@sgcib.com precious.paris@sgcib.com Investors structured.paris@sgcib.com London Energy, Plastics plastics.london@sgcib.com Plastics & Steel Specialist Sebastian Castelli Metals base.london@sgcib.com New York Energy energy.newyork@sgcib.com Base Metals, Steel base.newyork@sgcib.com (1) 212 278 57 36 Precious Metals precious.newyork@sgcib.com Plastics plastics.newyork@sgcib.com

(33) 1 42 13 44 06

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Oil & Products / Cross Commodity Strategy Remy Penin (33) 1 42 13 55 74 Agricultural Commodities Emmanuel Jayet Energy Special Advisor Sadek Boussena London Cross Commodity Technical Analysis Stephanie Aymes (44) 207 762 58 98 Oil & Products Michael Wittner Cross Commodity Strategy Jesper Dannesboe Metals David Wilson New York US Natural Gas Laurent Key

(33) 1 42 13 57 03

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(852) 2166 5515

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Investors commodityinvest.newyork@sgcib.com

(1) 212 278 62 55

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16

13 October 2009

US Natural Gas Drivers

DISCLAIMER

The information herein is not intended to be an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities and including any expression of opinion, has been obtained from or is based upon sources believed to be reliable but is not guaranteed as to accuracy or completeness although Société Générale (“SG”) believe it to be fair and not misleading or deceptive. SG, and their affiliated companies in the SG Group, may from time to time deal in, profit from the trading of, hold or act as market-makers or act as advisers, brokers or bankers in relation to the securities, or derivatives thereof, of persons, firms or entities mentioned in this document or be represented on the board of such persons, firms or entities. Employees of SG, and their affiliated companies in the SG Group, or individuals connected to them may from time to time have a position in or be holding any of the investments or related investments mentioned in this document. SG and their affiliated companies in the SG Group are under no obligation to disclose or take account of this document when advising or dealing with or for their customers. The views of SG reflected in this document may change without notice. To the maximum extent possible at law, SG does not accept any liability whatsoever arising from the use of the material or information contained herein. Dealing in warrants and/or derivative products such as futures, options, and contracts for differences has specific risks and other significant aspects. You should not deal in these products unless you understand their nature and the extent of your exposure to risk. This research document is not intended for use by or targeted at retail customers. Should a retail customer obtain a copy of this report they should not base their investment decisions solely on the basis of this document but must seek independent financial advice. Important Notice: The circumstances in which this publication has been produced are such (for example because of reporting or remuneration structures or the physical location of the author of the material), that it is not appropriate to characterise it as independent investment research as referred to in European MIF directive and that it should be treated as a marketing material even if it contains a research recommendation (« recommandation d’investissement à caractère promotionnel »). This publication is also not subject to any prohibition on dealing ahead of the dissemination of investment research. However, it must be made clear that all publications issued by SG will be clear, fair, and not misleading. Analyst Certification: Each author of this research report hereby certifies that the views expressed in the research report accurately reflect his or her personal views about any and all of the subject securities or issuers. Notice to French Investors: This publication is issued in France by or through Société Générale ("SG") which is authorised by the CECEI and regulated by the AMF (Autorité des Marchés Financiers). Notice to UK Investors: This publication is issued in the United Kingdom by or through Société Générale ("SG") London Branch which is regulated by the Financial Services Authority ("FSA") for the conduct of its UK business. Notice to US Investors: This report is issued solely to major US institutional investors pursuant to SEC Rule 15a-6. Any US person wishing to discuss this report or effect transactions in any security discussed herein should do so with or through SG Americas Securities, LLC to conform with the requirements of US securities law. SG Americas Securities, LLC, 1221 Avenue of the Americas, New York, NY, 10020. (212) 278-6000. Some of the securities mentioned herein may not be qualified for sale under the securities laws of certain states, except for unsolicited orders. Customer purchase orders made on the basis of this report cannot be considered to be unsolicited by SG Americas Securities, LLC and therefore may not be accepted by SG Americas Securities, LLC investment executives unless the security is qualified for sale in the state. Notice to Japanese Investors: This report is distributed in Japan by Société Générale Securities (North Pacific) Ltd., Tokyo Branch, which is regulated by the Financial Services Agency of Japan. The products mentioned in this report may not be eligible for sale in Japan and they may not be suitable for all types of investors. Notice to Australian Investors: Société Générale Australia Branch (ABN 71 092 516 286) (SG) takes responsibility for publishing this document. SG holds an AFSL no. 236651 issued under the Corporations Act 2001 (Cth) ("Act"). The information contained in this newsletter is only directed to recipients who are aware they are wholesale clients as defined under the Act. http://www.sgcib.com. Copyright: The Société Générale Group 2009. All rights reserved.

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13 October 2009 17

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