Looking at the majority of market points for Tuesday natural gas deliveries, one might conclude it was a lazy summer day's trading. However, Southern California and New England quickly put that to rest.
Traditional producing basins -- and even some not so traditional such as the Marcellus Shale -- moved within a nickel or so of unchanged, but pipeline outages in New England and heat and power loads in Southern California were enough to scoot theNGI National Spot Gas Average higher by a stout 10 cents to $2.64.
Futures trading was far less interesting. September advanced all of four-tenths of a cent to $2.590, and October rose three-tenths of a cent to $2.629. September crude oil continued its trek upward, logging a $1.25 advance to $45.74/bbl.
Gas for next-day delivery in Southern California vaulted higher as next-day power loads were forecast to increase by close to 6%, but Northern California locations showed only modest price increases. CAISO reported that forecast peak load Monday of 42,877 MW was expected to jump to 45,384 MW Tuesday.
Gas at Malin rose a penny to $2.64, and deliveries to the PG&E Citygate added 6 cents to $3.20.
Southern California points were a different story, as gas at the SoCal Citygate rose 54 cents to $3.55, and deliveries to SoCal Border Avg. points were quoted 50 cents higher at $3.41. In addition, El Paso S. Mainline/N. Baja jumped 43 cents to $3.54, and packages on Kern Delivery rose 49 cents to $3.52, a one-year high.
Renewable energy continues to compete with natural gas for market share. By midday Monday, peak renewable energy was running a stout 11,335 MW, or 26% of forecast peak load. No notices or flex-alerts requesting consumers or businesses to reduce power use were in effect.
A Southern California manufacturer of building materials reported that he had seen OFOs for Sunday and Monday from SoCal Gas but none for Tuesday.
Meanwhile, gas in New England for next-day delivery jumped as transportation proved to be difficult to procure.
Algonquin Gas Transmission (AGT) reported that a force majeure event because of an unplanned outage at its Southeast Compressor Station in southeastern New York, which occurred on Aug. 14, was in effect.
If that weren't enough, AGT restricted 100% interruptible, 100% secondary out of path, 100% secondary in path, and approximately 24% of primary firm nominations sourced from points west of the station for delivery east.
"No increases in nominations sourced west of Southeast for delivery east of Southeast, except for primary firm No-Notice nominations, will be accepted,” AGT said.
AGT also restricted 100% interruptible, 100% secondary out of path and 100% secondary in path nominations sourced from points west of its Stony Point Compressor Station for delivery east. No increases in nominations sourced west of Stony Point for delivery east, except for primary firm No-Notice nominations were being accepted, the company said on its website.
Gas for delivery at the Algonquin Citygate surged $2.63 to $6.00, and deliveries to Iroquois, Waddington gained 12 cents to $3.01. Gas on Tenn Zone 6 200L jumped $2.00 to $5.31.
Next-day peak power prices also aided and abetted the cause of higher gas prices. Intercontinental Exchange reported that on-peak power Tuesday at the ISO New England's Massachusetts Hub rose $14.20 to $68.38/MWh.
Other market locations were more subdued. Gas on Transco Zone 6 into New York rose 3 cents to $2.80, and deliveries to the Chicago Citygate added a penny to $2.67. Gas at the Henry Hub changed hands a penny higher at $2.71, and deliveries to El Paso Permian were flat at $2.59.
"Despite bearish weather risk looking to outdo bullish risk in the coming couple of weeks, other bullish factors such as decreasing Canadian imports are similarly being priced in, and these may keep stronger support around the $2.52 level than previously expected,” said Harrison, NY-based Bespoke Weather Services in a Monday morning report.
"The result is thus that weather may not significantly drive price action through the week; though we still see it capping upside past $2.70-2.75 as confidence only increases that cooling demand falls back to at least average (if not below average) in the medium-range somewhere in that seven- to 10-day timeframe."
Sunday night, "we gapped down just a couple of cents and saw prices quickly bounce back towards even; when gaps fail like that it is often a sign of a reversal, as the gap showed the weekend bearish weather trends we were following but the quick jump in prices appeared to represent the tighter scrapes and other fundamentals that indicated more short-term support."
Overnight, however, the operational global forecast system "lost even more weather-driven demand to show it likely coming in below average through the next 15 days; the most bearish risk continues to be in the 11- to15-day forecast, however, which remains relatively low confidence."
Market technicians are buying into the bearish case.
"So far, natgas has found support at $2.538-2.512-2.500, our A=C objective from $2.998. But is this a bottom?" asked United ICAP market technician Brian LaRose in closing comments Friday.
"We are not convinced. To even suggest $2.523 marked the end of an ABC pattern bulls will need to lift natgas up and over $2.704. If the bulls can not make that happen we would be prepared for a test of the $2.472-2.468-2.454-2.408-2.384 neighborhood after a brief pause."