In natural gas trading last Friday, Southern California prices soared as forecasts for extreme heat kept buyers on the defensive. That extreme heat was realized, with temperatures in Los Angeles averaging 92 over the weekend, about 8 degrees above normal.

Gas for Tuesday delivery in southern California had a different look as temperature forecasts moderated and the next-day power market plunged.

The NGI National Spot Gas Average was down a penny at $2.65, but California prices averaged about a 20-cent decline. Gains in Appalachia and the Northeast were unable to offset the half-dollar losses at some points in and around Southern California. Futures prices eased as well and at the close August had shed 3.0 cents to $2.747 and September was down 3.1 cents to $2.712. September crude oil continued its lackluster performance dropping $1.06 to $43.13/bbl.

Next-day gas prices affecting the Southern California market tumbled as next-day power at locations in and around California fell hard. Intercontinental Exchanged reported that on-peak power at NP-15 for Tuesday fell $7.99 to $43.01/MWh and power at SP-15 skidded $5.53 to $44.99/MWh.

Power markets to the north also took some big hits. Next-day power at COB fell $32.00 to $40.50/MWh, and deliveries to Mid-Columbia skidded $24.69 to $33.75/MWh.

Gas at the SoCal Citygate fell 57 cents to $3.08, and gas priced at the SoCal Border Avg. Average dropped 50 cents to $2.94. Deliveries on El Paso S Mainline shed 64 cents to $3.04, and gas on Kern Delivery changed hands 44 cents lower at $3.04.

Other California points were less affected. Gas at the PG&E Citygate was flat at $3.13, and deliveries to Malin were quoted 4 cents higher at $2.75.

Temperatures were forecast to moderate in southern California as well. AccuWeather.com predicted that Los Angeles’ high of 91 degrees Monday would ease to 87 Tuesday and 86 Wednesday, 2 degrees above normal. Burbank’s 93 high on Monday was expected to hold Tuesday before easing to 91 Wednesday. The seasonal high in Burbank is 87.

New England gas buyers were kept busy as Boston’s high Tuesday was expected to be 10 degrees above normal. AccuWeather.com said Monday’s high in Boston of 88 would reach 92 Tuesday before easing to 89 Wednesday, 7 degrees above normal.

Deliveries to Algonquin Citygate gained 5 cents to $3.25, but gas on Tenn Zone 6 200L rose 23 cents to $3.19.

At the Chicago Citygate Tuesday gas was quoted 9 cents lower at $2.75 and deliveries to the Henry Hub changed hands 3 cents higher at $2.81. Gas on El Paso Permian was flat at $2.69.

Traders see scale down buying a limiting any major move lower. “I think the market stays in this area and tries to work a little better,” a New York floor trader told NGI.

“Right now I think the best shot is to the upside. Longs are still comfortable with the market, and weather being what it is as long as supply numbers cooperate, prices will stay in their present range.”

Market technicians are looking higher and see a decent chance the market has more room to the upside. “I remain unconvinced that natural gas has put in its seasonal peak,” said Walter Zimmermann, vice president at United ICAP, in a weekly webcast.

“The technical case for $2.998 [late June] as the seasonal peak is unconvincing. We still have been unable to take out the 0.236 retracement, and natural gas bulls can now point to a bullish falling wedge pattern that failed to follow through on the downside, failed to take out the 0.236 retracement [300 minute chart] and Friday broke above the falling wedge resistance line.

“Even if this rebound from $2.625 [Thursday] is the bear market correction of this leg down, being natural gas, I would still expect it to see $2.86, I wouldn’t be surprised to see $2.92, and I wouldn’t be the least surprised to see natural gas trade $2.94 even if $2.998 was the seasonal peak.”

With some of the record temperatures being recorded, it would seem that power burns would be at record levels as well. Not quite, says one power and gas consulting firm.

“Over the past week or so, the country’s energy grid has been seeing record net load. In fact, the entire month has been running at a rate higher than what we saw last year during the month of June,” said EnergyGPS, a Portland, OR-based analytics firm. “This is due to the heat bubble that sat over most of the country all month. California and the Pacific Northwest were the two regions shielded by the heat wave earlier in the month. That all started to change last week as Southern California’s load shifted up with Burbank’s highs over 100 degrees for a couple of days.

“Considering how much more net load demand there is on the grid at this time, one would think the power burns should be even stronger than the new record highs we saw last week. This is not the case as the renewable penetration on the grid is still impacting the overall net thermal demand, which turns out to be natural gas-fired generation.”

In its Early View sample of 10 traders Friday The Desk average for Thursday’s storage report came in at 28 Bcf, well below last year and the five-year average of 52 Bcf.