Natural gas for weekend and Monday delivery was in demand Friday as a late-winter cold blast ignited buying interest along with higher power prices and hefty increases in expected power loads.
All but two points followed by NGI recorded gains ranging from a few pennies to a nickel or more, but several eastern locations went deep into double-digit gains. The NGI National Spot Gas Average gained 6 cents to $1.77, and eastern points, on average, jumped more than 30 cents. Futures ended on a weak note, with April giving up 2.9 cents to $1.907 and May retreating 2.2 cents to $1.989. April crude oil shed 76 cents to $39.44/bbl.
A trifecta of higher power prices, below-normal temperatures, and forecast higher power loads all combined to send weekend and Monday packages sharply higher. Intercontinental Exchange reported that Monday on-peak power at ISO New England's Massachusetts Hub jumped $12.97 to $36.97/MWh, and at the PJM West terminal on-peak power Monday rose by $11.74 to $37.43/MWh.
Gas for weekend and Monday delivery at the Algonquin Citygate jumped 85 cents to $3.10, and deliveries to Iroquois, Waddington gained 20 cents to $2.19. Parcels on Tenn Zone 6 200L also added 78 cents to $2.95.
In the Mid-Atlantic buyers were also active. Gas on Tetco M-3 delivery rose by 11 cents to $1.38, and gas bound for southeastern-most Pennsylvania as well as southern New Jersey and Trenton on Transco non New York North posted a stout 64 cent gain to $2.05.
Major hubs sported steady to higher quotes also. Gas at the Chicago Citygate added 4 cents to $1.95, and gas at the Henry Hub rose 2 cents to $1.84. Gas on El Paso Permian changed hands up a penny at $1.65, and packages priced at the SoCal Border Avg. Average were quoted 3 cents higher at $1.70.
Temperatures over the weekend in the East and Midwest were forecast to visit below-normal levels not seen in close to two weeks. AccuWeather.com predicted that the high in New York City Friday of 59 would drop to 36 Sunday before reaching 44 Monday, 7 degrees below normal. Chicago's 43 Friday high was seen easing to 41 Sunday before adding a degree to 42 Monday, still 6 degrees below normal.
Sunday power loads were also predicted to rise above Friday loads. ISO New England forecast peak power load Friday of 14,480 MW would rise to 15,330 MW Sunday. PJM Interconnection expected peak load Friday of 29,748 MW to climb to 33,820 MW Sunday.
Jim Ritterbusch of Ritterbusch and Associates sees an improving supply-demand balance. "The ability of this market to advance in the face of a seemingly neutral EIA storage report attests to some significant chart improvement that was accommodated by some apparent bullish spillover from yesterday's upside acceleration in the oil futures," he said in a Friday note to clients. "As the US economy could expect additional improvement off of what appears to be a continued low rate environment through the rest of this year, some improvement in the industrial segment of the natural gas consumption pie is likely being priced in.
"With the weather factor driving much of the weekly shifts in gas prices, the gas market's status as an industrial commodity is often ignored. But with the arrival of the shoulder period, non-weather related factors will be acquiring greater focus. In addition to a potential lift in industrial offtake, it would appear that production will be exhibiting some long awaited response to a sub $2 pricing environment. Along with this development, ongoing shifts on the demand side are also likely sustainable as coal usage by the utilities continues to get displaced by the comparatively low priced gas market.
For the moment, Ritterbusch is keeping a close eye on technical factors. "[P]iecing together additional price gains in April futures to above the $2 mark during the next week and half will prove challenging. Nonetheless, we will defer to yesterday's down trend line violation that could accommodate a test of the $2 mark with only limited assistance from cooler temperature views that are now being generally expected across the final week of this month."
Gas buyers for power generation across the MISO footprint will likely have to be on their toes as significant wind generation may not be in the cards until early next week. "A pair of weak disturbances and a deepening upper-level trough will allow seasonably cool conditions to become more widespread by the end of the week through the weekend," said WSI Corp. in a Friday morning report.
"Widely scattered snow and rain showers are possible. High temps will retreat into the 30s and 40s north; 50s and 60s south. A south-southwest flow will develop early next week around fleeting high pressure and a wave of low pressure along the Canadian border. This will lead to a sharp warming trend and the return of above-average spring warmth by Tuesday. Highs may generally warm in the 50s, 60s and 70s.
"Relatively light wind generation is expected today into the weekend. A southerly wind will cause wind gen to ramp up early next week with the potential for output to exceed 10 GW."