A few physical natgas delivery points in the east traded a few pennies higher for Wednesday delivery, and a few other national points traded unchanged, but the vast majority slipped anywhere from a nickel to a dime or more.
All points in the Midwest, Midcontinent, Texas, the Rockies and California finished in the red, and the NGI National Spot Gas Average retreated 7 cents to $2.51. Futures lost ground as well but still stayed within recent trading ranges. At the close, April had fallen 7.7 cents to $2.824 and May dropped 6.3 cents to $2.921. April crude oil shed 6 cents to $53.14/bbl.
Not all traders are willing to give up on winter. "If someone says winter is over, I know that winter is not over, and I've got the emails to prove it," said John Woods, president of JJ Woods and Associates in New York.
"Granted, I am eating TV dinners around $2.50, but you are going to get a rally, and it’s going to be because of one of two things. You are going to get the weather, and the market is way too short. You are going to see this thing scream right back up to the mid $2.90s, but I don't expect it to break $3 because it is March.
"Right now, no one is going to take a large position either short or long when you are close to $3, and it's the same in reverse. If we were down around $2.50, no one would say 'this is a great area to get short.’ Essentially, we are rangebound. You will be a seller above $2.85 and a buyer right below $2.65.
"Once you get down there, the risk of adding more shorts is that you give away some profits. For the next two weeks we'll be in a tight trading range, and that's indicative of coming out of one season and going into another season," Woods said.
Others are maintaining a bearish posture.
"We are maintaining a bearish trading stance and would suggest holding April futures positions established last week above the $2.80 level," said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. "We are still suggesting stop protection above $2.95 on a close-only basis while we still see eventual downside possibilities to around $2.52. While we may be forced to adjust our downside expectations higher unless mild temperatures return, we still see a revisit to last month's lows of $2.64 as high probability.
"This week's EIA release won't likely have much price impact from either direction, but we feel that another downsized storage withdrawal in the 50-60 Bcf area will be forthcoming. Such a decline would imply further expansion in the supply surplus of more than 70 Bcf. And although some surplus contraction would appear likely later this month, we feel that a supply excess against averages of around 10% will be able to contain price strength below the $3 mark, even with the rollover to the higher-priced May futures.
"From a longer-term perspective, this looks like a trade that will remain confined to about the $2.50-3.00 zone within a one-month time frame followed by a gradual uptrend into the summer period should production continue to fall short of our expectations."
In the physical market prices on the West Coast eased as forecast temperatures were mixed and power loads were expected to be steady. Forecaster Wunderground.com predicted that the high Tuesday in San Francisco of 57 would climb to 65 Wednesday and slide to 64 Thursday, 2 degrees above normal. Los Angeles, on the other hand, was expected to see its Tuesday high of 74 jump to 83 Wednesday and Thursday, 13 degrees above normal.
Deliveries to Malin fell 8 cents to $2.48, and gas at the PG&E Citygate shed 10 cents to $3.06. Packages priced at the SoCal Citygate fell 9 cents to $2.81, and gas at the SoCal Border Avg. averaged $2.48, down 11 cents.
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Power loads were forecast steady. CAISO predicted that Tuesday's modest peak load of 28,279 MW would inch up to 28,692 MW Wednesday.
California's highest recorded load was 50,270 MW reached in July, 2006. Last year's peak reached 46,232 MW, also in July.
The National Weather Service in San Francisco forecast mild conditions. "Fair weather is forecast to continue through the week with warming temperatures and generally light winds. Light rain is possible across the far northern portions of Sonoma County through tonight."
Elsewhere, soft next-day power pricing kept prices on the defensive. Intercontinental Exchange reported on-peak Wednesday power at the Indiana Hub fell $3.58 to $27.00/MWh and next-day power at the PJM West terminal fell 92 cents to $26.14/MWh.
Gas on Dominion South fell 3 cents to $2.18, and deliveries to the Chicago Citygate skidded 6 cents to $2.70. Gas at the Henry Hub was quoted 10 cents lower at $2.58, and parcels on El Paso Permian shed 7 cents to $2.37. Gas at Opal lost 9 cents to $2.41.
Overnight weather models showed a near-term loss in heating load. "[Tuesday's] six-10 day forecast is a bit colder across the southern tier and East Coast but is much warmer over the Rockies and Midcontinent," said WSI Corp. in its Tuesday morning report to clients. "The warmer changes offset the colder ones, so GWHDDs are down 4.6 to 103.4 for the period.
"Forecast confidence is only average at best today. Confidence has actually improved early in the period based on better model agreement and some consistency with the storm track. However, confidence is lowest late in the period as there is uncertainty with how quickly the Pacific-driven pattern will begin to break down."