Broad losses Thursday countered soaring California physical prices and the NGI National Spot Gas Average fell a penny to $2.65.
Most points followed by NGI fell anywhere from a few pennies to upwards of a dime or more, but healthy double digit gains in California boosted the average into the black. Futures managed a successful test of market support in the low $2.80s and at the close August had settled at $2.888, up 4.8 cents, and September rose 4.4 cents to $2.881. August crude oil added 39 cents to $45.52/bbl.
Western quotes jumped. Gas at the PG&E Citygate rose a penny to $3.16, but gas at the SoCal Citygate gained 27 cents to $3.62. Deliveries priced at the SoCal Border Average soared 30 cents to $3.22 and gas on Kern Delivery vaulted 38 cents to $3.27.
Other market centers were a few pennies lower. Gas at the Algonquin Citygate shed 5 cents to $2.18 and packages on Dominion South rose 1 cent to $1.98. Gas on Transco Zone 6 New York fell 4 cents to $2.19 and Chicago Citygate fell a nickel to $2.70.
Deliveries to the Henry Hub fell 2 cents to $2.88 and gas on Panhandle Eastern gave up a penny to $2.51. Gas at Opal added 3 cents to $2.66.
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August natural gas opened 5 cents higher Thursday morning at $2.89 as weather models turned slightly more constructive.
MDA Weather Services in its morning 11- to 15-day client forecast said, "The forecast trends slightly warmer in the East at mid-period while continuing to favor pattern variability across the Eastern Half. This lends near normal temperatures for the region overall, while areas farther west from the Plains points west see aboves persisting.
"Within the atmospheric background is a MJO [Madden Julian Oscillation] signal tracking across its Pacific phases, phases which correlate with cooler variability from the Midwest to the East this time of year. However, a warmer signal associated with the +AO [Arctic Oscillation] is a limiting factor behind the cooler MJO. Confidence remains lowest from Midwest to East due to these mixed indicators."
MDA also reported that Tropical Depression 4 has formed in the central Atlantic and is expected to continue to move west-northwest before weakening this weekend as it crosses to the north of the Leeward Islands. It noted that conditions were quiet elsewhere and put the threat to Gulf production facilities at 0%.
Tim Evans of Citi Futures Perspective saw Wednesday's 11 cent price plunge as the result of "near-term temperature outlook trend[ing] cooler, subtracting some cooling demand from the current fundamental equation."
Traders Thursday will be looking at storage estimates about in line with the five-year average. Last year a thin 38 Bcf was injected, and the five-year pace stands at 66 Bcf. FC Stone calculates a build of 59 Bcf and PIRA Energy is expecting an increase of 65 Bcf. A Reuters survey of 21 traders and analysts showed a sample mean of 64 Bcf with a range of +57 Bcf to +68 Bcf.
Tom Saal, vice president at FCStone Latin America LLC in Miami in his work with Market Profile said, "The recent sell-off has produced two Market Profile Double Distribution Trend Days separated only by Tuesday's holiday. Trend Days infer 'exhaustion' in the direction of the price move -- could be near the end of this down cycle."
Saal looks for the market to test Wednesday's value area at $2.900 to $2.832 and "eventually" test $2.988 to $2.972. "Maybe" the market tests $3.100 to $3.066, he said.