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All Markets United in Softness; West Drops Smallest
Much like in trading for the long holiday weekend, the West showed the greatest relative price strength Tuesday, but even that region succumbed to overall falling numbers. With a natural gas screen dip of 9.2 cents almost lost in a general crash of energy futures and forecasts pointing to a cool September for most of the eastern U.S., prospects for a substantive gas price rally appear remote.
A big majority of points moved almost in lockstep Tuesday in recording losses between 20 cents and a little more than 30 cents, with most of them in the general vicinity of a quarter. In the West, which not too coincidentally retains the last bastion of very hot weather running from the desert Southwest through inland California and even as far north as low 90s highs around Portland, OR, declines ranged from about a nickel to a little more than 20 cents; nearly all were in the teens.
Natural gas certainly can’t look for any support from petroleum-related futures. The contracts for crude oil, heating oil and unleaded gasoline in New York Harbor all took massive hits Tuesday, with October crude plunging more than $2 to well under $30/bbl. The end of the summer driving season, signified by the Labor Day weekend, was expected to put much less pressure on gasoline stocks, which have approached record retail prices in recent weeks.
A Midcontinent marketer said his firm had a “pretty bearish” price outlook not only for this week but all through September. “We saw a few people today [Tuesday] closing up short positions that they entered the month with,” but otherwise paying customers were in short supply, he said. Weather around the Midcontinent and Midwest is pleasant currently, and there’s no change from that in sight, the marketer added.
There was a little rally in cash near the end, he continued, but “sympathy with the screen” pullback from a dime-plus dip was all he could think of as a reason. Whoever needs gas for whatever reasons in the coming days and weeks “can get some pretty cheap bargains” compared to earlier in the year, he said.
Another source also noted that comparatively “cheap” gas is likely to reinforce the bear market trend by encouraging larger than normal storage injections this month. Analyst Thomas Driscoll of Lehman Brothers forecast an injection of 75 Bcf (for the week ended Aug. 29) in this week’s report. The volume would compare with a refill of 65 Bcf last year and a five-year average of 61 Bcf.
Despite its super-powerful maximum sustained winds of nearly 140 mph (nearly twice the 74 mph strength required for hurricane status), Hurricane Fabian is being discounted as a threat to Gulf of Mexico production as it points more toward a landing somewhere along the East Coast. At 5 p.m. AST Tuesday the center of Fabian was about 210 miles north-northeast of Barbuda in the northern Leeward Islands, according to the National Hurricane Center. Its forward speed of not quite 10 mph represented a major slowdown from its pace of 20 mph-plus late last week.
An East Coast utility buyer reported hearing no reports of production shut-ins resulting over the long weekend from Tropical Storm Grace, which went ashore over the Texas coast accompanied by a lot of area rain but little else. The buyer said she would guess that any shut-ins “would be pretty minor.” The Minerals Management Service did not answer a request for shut-in reports.
Calgary-area temperatures aren’t quite getting down to freezing at night, “just very chilly,” commented a producer.
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