March natural gas is expected to open up a penny Friday morning at $2.00 as traders see a weak pricing scenario going forward and suggest tweaking trading positions accordingly. Overnight oil markets rebounded.
Traders see Thursday's market response as a harbinger of things to come. "[T]he market appears to be pricing in some structural shifts that include slower than expected production slippage, easy import availability and less than expected switching away from coal and other alternatives to the gas market," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Thursday. "With electric generation demand falling short of our expectations, our bearish inclinations have been reinforced, and it would appear that our downside target in April futures of $1.91 could be achieved sooner rather than later.
"But we still don't expect such a development until next week. On the temperature front, an unusual mix of forecasts has been seen this week, but most models appear to tilt toward a broad based warm-up that will begin next week that is capable of extension toward month's end. We suggest holding April shorts and would adjust stop protection lower to above today's highs."
Gas buyers over the weekend across the PJM footprint seeking to augment supplies for power generation will likely have to be on their toes as wind generation is expected to subside over the weekend.
WSI Corp. in its Friday morning report said, "A quick-moving disturbance and cold front will race across the power pool [Friday] and tonight with a brief round of snow showers/squalls. A gusty north-northwest wind behind this system will usher pure arctic air and the coldest air of the season into the power pool for the weekend. High temps will range in the single digits, teens to mid 20s. Lows will range in the single digits below zero to the mid teens. Arctic high pressure will depart during Monday, allowing a frontal system to move across the power pool and up the East Coast with a round of snow, wintry mix and rain, as well as moderating temperatures. Heavy snow is possible over the Appalachians. Temperatures may rebound in the 30s, 40s to mid 50s by Tuesday.
"A gusty north-northwest wind will cause wind generation to ramp up during the next couple of days. Output may rebound back to 4-5 GW, [and] wind gen will likely subside during Saturday night into early Sunday," WSI predicted.
In overnight Globex trading March crude oil jumped $1.24 to $27.45/bbl and March RBOB gasoline surged 6 cents to $0.9989/gal.