Next-day physical natural gas posted robust gains in Monday trading as brutally uncomfortable weather was expected Tuesday and beyond in Southern California, the Midwest and on the East Coast.
Only a handful of points slipped into the loss column, and the NGI National Spot Gas Average was up 9 cents at $2.70. Nearly half the points followed by NGI made new one-year highs.
Futures trading was a snooze, even as the September futures expired. September settled at $2.853, down 1.8 cents, with a daily range of less than 7 cents, while October finished at $2.896, down 1.7 cents. October crude oil fell 66 cents to $46.98/bbl.
Major metropolitan areas were forecast to endure warm temperatures and high heat indices. Accuweather.com expected Philadelphia's high of 92 degrees Monday to ease to 88 Tuesday, but with a heat index of 94. Wednesday was forecast at 90, but the seasonal high is 83. Chicago's high Monday of 82 was expected to hold Tuesday, but that represented a heat index of 95. Wednesday was expected to drop to 76, 5 degrees below normal.
Midwest points posted solid gains. Chicago Citygate came in at $2.95, up 14 cents, and Consumers was at $2.97, up 12 cents. Gas on Michigan Consolidated added a dime to $2.93, and Northern Natural Ventura rose 13 cents to $2.88.
Chicago Citygate, Alliance and Northern Natural Demarcation were just a few of the many market points making one-year highs. Chicago Citygate at $2.95 bested its one-year high of $2.87, and Alliance beat its high by a penny at $2.93. Northern Natural Demarcation was higher than its one-year max by a nickel at $2.87.
The day's greatest gains were seen on the West Coast, where expected high power loads and warm temperatures gave buyers all the incentive they needed to step up to the plate. CAISO expected Monday's peak load of 38,257 MW to jump to 41,467 MW Tuesday.
California weather was also conducive to higher prices. Accuweather.com forecast Monday's high in Los Angeles of 87 degrees would reach a heat index-adjusted high of 96 Tuesday and then recede to 88 Wednesday, 3 degrees above normal.
Deliveries at Malin rose by 16 cents to $2.81, but gas at the SoCal Citygate surged 40 cents to $3.09. Parcels at the PG&E Citygate changed hands a dime higher at $3.37, and gas priced at the SoCal Border Avg. Average added 27 cents to $2.93.
Many market points made double-digit gains. Gas on El Paso Permian gained 18 cents to $2.72, but deliveries to Dominion South were flat at $1.34. Gas at Opal vaulted 19 cents to $2.78, and the Henry Hub was also one of the many points reaching one-year highs. At $2.95, up 8 cents, Henry Hub deliveries were a penny higher than their one-year average.
Other Gulf points making highs for the year included ANR SE, up 10 cents to $2.90, which surpassed its previous high of $2.84. Tennessee 500 L added 8 cents to $2.90, and that was enough to beat its one-year high of $2.86. Columbia Gulf onshore rose 8 cents to $2.89, enough to beat its high of $2.85.
Weather forecasters were calling for an ever so slight moderation in the outlook for above-normal temperatures. WSI Corp. in its Monday morning six- to 10-day outlook said the forecast for the day was "cooler early and warmer late in the period over the eastern two-thirds of the nation when compared to Friday's forecast. Some of these changes offset each other,” so Continental U.S. population-weighed cooling degree days were down 0.9 to 46.5 for the period.
Forecast confidence was near average, with medium-range models in agreement with the progression and development of a Pacific North American-driven pattern.
Tropical activity “is an ongoing source of uncertainty,” Accuweather.com said. "The Northwest and north-central U.S. have risks to the cooler side, while the Southeast and Texas could run a bit warmer."
Drilling rigs keep drifting away. The U.S. rig count released Friday was nearly flat from the previous week, down two, but Canada added 25 units, according to Baker Hughes Inc. Overall in the United States, two land rigs were dropped, with one down in the offshore while one rig returned to the inland waters.
The U.S. rig count declined by two to end the week at 489, with 468 running on land. Oil rigs were static at 406, but two natural gas rigs left, leaving 81 active, far from the 202 that were running one year ago. Three directional rigs were added, more than offset by the departure of three horizontals and two verticals.
The tropical Atlantic and Gulf of Mexico (GOM) remained highly active (see related story).
Likely load killing Tropical Depression (TD) 8 was headed to coastal North Carolina, 160 miles southeast of Cape Hatteras with 35 mph winds. The storm was headed toward the northwest at 7 mph and could become a tropical storm early Tuesday.
TD 9 was 275 miles west-southwest of Key West, FL, with 35 mph winds and moving to the west at 7 mph. NHC said it could become a tropical storm later Monday. TD 9 was enough to shut in some GOM wells and force personnel evacuations.
Based on data from offshore operator reports submitted to the Bureau of Safety and Environmental Enforcement (BSEE) through 11:30 a.m. CDT Monday, personnel had been evacuated from six production platforms, less than 1% of the 781 manned platforms in the GOM. Personnel had also been evacuated from one of the 16 rigs currently operating and five deepwater rigs have been moved out of the storm's path.
"From operator reports, it is estimated that approximately 11.48% of the current oil production in the Gulf of Mexico has been shut in," BSEE said. "It is also estimated that approximately 5.51% of the natural gas production in the Gulf of Mexico has been shut in."