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NatGas Cash Sees Five-Cent Loss; Futures Ease A Penny

Physical natural gas in trading on Friday for Sunday and Monday delivery followed in Thursday's footsteps and put in another decline. Outside of a few points in East Texas and the Northeast, losses from a nickel to a dime or more were common, and weakness in Texas, Louisiana, Appalachia, and the Southeast couldn't overcome localized double-digit strength in the Northeast. The NGI National Spot Gas Average skidded 5 cents to $2.41.

Futures trading couldn't hold a candle to the broad weakness in the cash market, and the November contract was held to a 5-cent trading range. At the close November had eked lower by 1.0 cent to $3.007 and December was off by three-tenths of a cent to $3.181. November crude oil rose 11 cents to $51.67/bbl.

A forecast of a sharp one-day temperature drop in the Northeast sent Sunday and Monday quotes soaring. Wunderground.com forecast that Boston's Friday high of 65 would sink to 57 Saturday before recovering to 65 by Monday, 3 degrees below normal. Hartford, CT's Friday high of 68 was seen dropping to 58 Saturday and climbing back to 74 on Monday, 5 degrees above normal.

Gas on Iroquois Zone 2 vaulted 73 cents to $2.27, and gas on Transco Zone 6 New York rose a stout 31 cents to $1.52.

Intercontinental Exchange reported on-peak Monday power at the ISO New England's Massachusetts Hub rose $1.68 to $24.09/MWh.

Elsewhere eastern quotes sagged for the first two days of October deliveries. Gas at the Algonquin Citygate shed 3 cents to $1.67 and parcels priced at Tetco M-3 Delivery fell 13 cents to $1.05. Gas on Dominion South gave up 24 cents to 75 cents.

The National Weather Service in southeast Massachusetts reported that a fast moving low pressure system "will bring a round of showers and unseasonably cool temperatures late tonight into Saturday. Large high pressure will follow with dry weather and cool nights and mild afternoons Sunday, Monday and Tuesday. As the high drops south of our region, dry weather will continue but with unseasonably warm afternoons Wednesday and Thursday.

Gas at the Chicago Citygate was quoted 8 cents lower at $2.72 and deliveries to the Henry Hub shed 3 cents to $2.89. Parcels on El Paso Permian fell 8 cents to $2.31 and gas on Panhandle Eastern changed hands 8 cents lower at $2.41.

Kern River was seen at $2.37, down 8 cents and Kern Delivery fell 3 cents to $2.49. Packages at Malin retreated 10 cents to $2.41, and gas priced at the SoCal Border Average fell 4 cents to $2.47.

Although the market sold off following the release of seemingly supportive Energy Information Administration (EIA) storage data Thursday, traders still see this dynamic as providing a source of market support going forward.

"[S]ince the injection was significantly less than expected, we feel that this factor will eventually evolve as an important source of price support especially with additional contraction expected within next week's EIA release," said Jim Ritterbusch of Ritterbusch and Associates in a note to clients Friday.

"The sizable supply cushion that was available to the market last winter won't exist this year and as a result, a cold winter could easily translate to a sizable price advance.

"But, in the meantime, we are allowing for downside price possibilities in nearby futures into the $2.90-2.95 zone where we have suggested purchases in quest of a trading turn of around 30 cents to the upside. And although production has been stepped up more than we had expected, strong export activity is providing an offset. All in all, some more choppy/wide swinging trading conditions are expected that could leave November futures virtually unchanged some two to three weeks down the road."

Forecasts show a slight cooling in the West but otherwise continued above normal temps in the Midwest and East. "The forecast features cooler changes in this period from the Interior West/Rockies to the Midwest, with this being a result of model trends in deepening a trough over the region late in the period," said MDA Weather Services in its morning six- to 10-day report to clients.

"Confidence, however, comes down from yesterday's levels as model spread has increased, particularly in the Midwest and not only between models but also within each model's ensemble members. The forecast now leans on the warm side of the Euro model, but like that model features broad above and much above normal coverage across the Eastern Two-Thirds. Belows are limited to parts of the Interior West."

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