At first glance next-day physical gas prices didn't change much, but even though the NGI National Spot Gas Average only rose 4 cents to $2.58, there were big differences between the East and everywhere else.
Broad gains from Midwest market areas, the Midcontinent, Texas, the Gulf, California and the Rockies were able to subdue $1+ drops in New England and like-minded declines in the Mid-Atlantic. Futures traders were content to concentrate on longer-term weather forecasts, and the day's gains were already in the bank when trading opened. At the close April had added 7.4 cents to $2.901 and May was higher by 4.5 cents to $2.984. April crude oil fell 13 cents to $53.20/bbl.
Next-day gas prices in the East fell hard as demand in the form of forecast power loads was expected to decline the early part of the week. The New York ISO forecast that peak power requirements Monday of 19,945 MW were expected to slide to 19,108 MW Tuesday and 18,734 MW Wednesday. The PJM Interconnection predicted peak load Monday of 34,319 MW would fall to 33,159 MW Tuesday and 32,629 MW Wednesday.
Gas at the Algonquin Citygate plunged $1.50 to $2.45 and deliveries to Iroquois, Waddington dropped 62 cents to $2.92. Gas on Tenn Zone 6 200L shed $1.28 to $2.51.
Gas on Texas Eastern M-3, Delivery retreated 22 cents to $2.26, and gas bound for New York City on Transco Zone 6 skidded 99 cents to $2.24.
Temperatures at eastern points were expected to trend warmer throughout the week. AccuWeather.com forecast that Boston's 39 degree-high Monday would climb to 46 Tuesday and reach 59 by Wednesday, 16 degrees above normal. Philadelphia's Monday max of 54 was seen rising to 61 Tuesday and Wednesday, 11 degrees above normal.
Prices at Midwest market locations firmed as temperatures were forecast to trend lower into the middle of the week. AccuWeather.com predicted that the high in Chicago Monday of 61 would slide to 58 Tuesday and 51 Wednesday, 8 degrees above normal.
Gas at the Chicago Citygate rose 10 cents to $2.76, and packages at Northern Natural Demarcation gained 15 cents to $2.62. Deliveries to the Henry Hub changed hands 17 cents higher at $2.68, and gas at the SoCal Citygate was quoted up 16 cents at $2.90.
Next-day power prices in California rose. Intercontinental Exchange reported that on-peak power Tuesday at NP-15 rose 43 cents to $26.00/MWh and peak power at SP-15 gained $5.15 to $23.03/MWh.
Overnight weather data called for cooling heading into the last half of March. "The forecast trends colder in this period [11-15 day] as well when compared to both the Sunday Update and last Friday's expectations, with this being a result of lower confidence in the evolution of the MJO [Madden Julian Oscillation]," said MDA Weather Services in a morning report to clients.
"That signal, however, should remain a prominent forcing on the pattern, and the forecast favors a return to phases seven of the western Pacific. This supports a warm dominated U.S. pattern downstream of a Gulf of Alaska low, and the forecast responds by having a coverage of above normal temperatures spanning the Midcontinent and South. Any lingering belows are focused in the Pacific Northwest."
Forecasts of near-term heating load remained weak. The National Weather Service (NWS) for the week ending March 11 predicted below normal heating requirements in Midwest and eastern energy markets. NWS forecast that New England would experience 218 heating degree days (HDD), or seven below normal. New York, New Jersey and Pennsylvania would see 182 HDDs, or 24 fewer than normal, and the greater Midwest from Ohio to Wisconsin was expected to have 150 HDDs, or 16 fewer than its normal seasonal tally.
Analysts at Jeffries LLC remain bullish on natural gas prices, but after listening to numerous conference calls and factoring in the extremely mild winter lowered their 2017 natural gas price forecast. "Several gas leveraged E&Ps commented on the natural gas supply/demand balance, seeing current supply as unable to meet growing demand," said equity analyst Zach Parham. "We agree with these statements and remain bullish on gas prices. However, due to the very warm winter pushing natural gas storage higher, we recently reduced our 2017 gas price forecast by 10% to $3.15/MMBtu."
Risk managers see the market in a near-term holding pattern. "Natural gas closed up slightly on the week after trading in a choppy two-sided range for most of the week," said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm. "Now that gas has given back all of its cold weather gains, and has discounted warmer than normal temperatures for the next couple weeks, there is a good chance we could consolidate around current levels for a couple weeks. On a trading basis, we will hold our current producer collars."
DeVooght currently counsels trading accounts and end-users to stand aside, and producers should hold the remainder of a August 2016-July 2017 $2.7 put strip and short a $3.50 call strip at flat or hold a $2.75 put and short a $3.75 call paying 7 cents.