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Bears Gain Market Control Despite Firm Cash; November Drops a Dime

A mixed temperature regime prompted wide changes in next-day gas in Monday's trading, with gains in the Great Lakes and West Coast joining forces with strong eastern points offsetting losses in the Gulf, Midcontinent, and Rockies. Overall, the market added 5 cents.

Temperatures well below normal in the Ohio Valley and Great Lakes contrasted sharply with well above normal readings in California.

At the close of futures trading, November had violated key technical support and finished the day 9.6 cents lower at $3.670, and December was down 9.8 cents to $3.765. November crude oil eased 4 cents to $82.71/bbl.

On the West Coast, above-normal temperatures helped lift prices of gas destined for California.

"Above-normal temperatures will be the rule this week in the Los Angeles area, [and] daytime highs will rise into the upper 70s in downtown Los Angeles through Tuesday before rising into the 80s for the second half of the week,” said AccuWeather.com's Mark Leberfinger. “The normal high for this time of October is 78, [and] the higher temperatures will continue during a month that has seen the average temperature increase about 5 degrees above normal.

"Evening lows are expected in the low to mid-60s each day, and the next chance of rain for the region is possible toward the end of the month."

The high of 78 in Los Angeles Monday, the normal high, is forecast to reach 80 Tuesday and continue to 82 Wednesday, according to AccuWeather.com. Riverside, CA's Monday high of 79 is seen rising to 81 Tuesday and 87 Thursday. The normal high is 81. San Diego's high of 74 is expected to advance to 76 Tuesday and 77 by Wednesday. The seasonal high in San Diego is 72.

Power loads and next-day peak power prices were mixed. The California Independent System Operator predicted Monday's peak load of 31,000 MW would recede to 30,607 MW Tuesday.

IntercontinenalExchange reported next-day peak power at NP-15 rose 52 cents to $46.75/MWh, but peak power packages for Tuesday at SP-15 eased $1.77 to $45.29/MWh.

Next-day gas at Malin fell 2 cents to $3.60, but at the PG&E Citygates Tuesday parcels were seen at $4.24, up 2 cents. Gas at the SoCal Citygates added 12 cents to $3.94, and gas at the SoCal Border was up a nickel to $3.74. On El Paso S Mainline, next-day gas changed hands 6 cents higher at $3.75.

In the Ohio Valley and Great Lakes, prices firmed as high temperatures had difficulty getting out of the 50s.

"Wet weather will linger through Tuesday in Pittsburgh as below-average temperatures remain through much of the week," said AccuWeather.com’s Kevin Byrne. "Daytime highs will stay in the mid-50s through Thursday, [but] a normal high temperature for this time of year in Pittsburgh is in the low 60s.

"Tuesday will see on-and-off rain and drizzle before ending as a few showers during the evening, and dry weather will make a full return for Wednesday, but will be accompanied with a cool breeze. Dry conditions will remain through the rest of the week with partial sunshine as high temperatures gradually climb through Friday."

AccuWeather.com said Pittsburgh's high on Monday of 59 should reach a rainy 65 on Tuesday, but settle back to 58 on Wednesday with rain.The normal high in Pittsburgh for mid-October is 62. Detroit's Monday high of 58 is forecast to slide to 52 Tuesday and climb back to 56 on Wednesday. The seasonal high is 59. Chicago's 58 high on Monday was seen dropping to 52 Tuesday and Wednesday, 9 degrees below the seasonal norm.

Gas on Alliance for Tuesday added 4 cents to $3.78, and deliveries to the Chicago Citygates were seen a penny higher at $3.77. Parcels to Michcon added 2 cents to $3.79 and Consumers gained a penny to $3.78. Demarcation was quoted 3 cents higher at $3.75.

Eastern points scored the biggest gains. At the Algonquin Citygates, Tuesday gas changed hands 47 cents higher at $3.31, and on Iroquois Waddington next-day deliveries eased 11 cents to $3.74. Parcels on Tennessee Zone 6 200 L added 54 cents to $3.44.

Gas on its way to New York City on Transco Zone 6 rose by 56 cents to $2.37, and deliveries on Tetco M-3 came in 45 cents higher at $2.32.

The day's drop in the futures markets has analysts solidly in the bearish camp expecting much lower prices to come. That may all change by March when the potential for a major buying opportunity surfaces, analysts say.

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