Physical natural gas for Tuesday delivery rebounded from Friday's drubbing as weather-driven strength in New England, the East, and Rocky Mountains was able to outdo softer pricing in the Southeast, Louisiana, and Texas. The NGI National Spot Gas Average rose 5 cents to $2.71.
Futures traders are finding they have to adapt to the market's narrow trading range, and at the close October had fallen 4.0 cents to $2.919, and November had shed 3.3 cents to $2.988. November crude oil added a stout $1.56 to $52.22/bbl.
Traders see the longstanding futures trading range between $2.80 and $3.15 not changing much in the near term.
"I think that you have cautious scale down under the market that will be supportive, and I think you have orders just above the market which is cautiously selling, but I don't think there is conviction either way. I think both bulls and bears fear a breakout against them and both are cautious," a New York floor trader told NGI.
"The weather is kind of funky right now, and there is enough resistance on both sides to keep the market in a pocket. I think there is a question on which way the market will go and there are half-hearted opinions which are putting support and resistance in the market.
"I don't think the market is ready to make a decisive move, right yet."
Other traders see enough of a range for productive trading. "I did trade out of my long positions in natural gas, but I sold a little early," said Alan Harry, trader and principal with Harry's RE Trust in New York.
"When it traded down through $3.10, that's when I sold out, and made about 12 to 14 cents on the trade.
“I am buying right now, and am still very, very bullish on natural gas. I am buying the March-April spread from 30.1 cents down to 28 cents and the November futures from $3 down to $2.90. I bought today and have accumulated a small position."
Harry and other market bulls will be fighting supply headwinds if the analysis by a leading brokerage firm is correct. Demand, weather-driven or otherwise, will take on increased importance in balancing the U.S. natural gas market. "US natural gas production hit an all-time high this week at 74.5Bcf/d led by Northeast production which also set a record of 25.3Bcf/d on Friday," said Tudor Pickering Holt in a note to clients.
"Sabine Pass LNG nominations were 2.9 Bcf/d on Wednesday, which implies that the plant is producing around, or even, above nameplate capacity. According to figures November Gulf Coast LNG was trading at a very strong $6.7/MMBtu. Make no mistake, US supply is growing in 2018, driven by Northeast and associated (Permian) gas. Gas markets hoping the demand side stays robust to offset this inevitable surge of supply growth."
In the physical market forecast temperatures as much as 15 degrees above normal in New England sent next-day quotes bounding higher. Accuweather com predicted the high Monday in Boston of 80 would reach 82 Tuesday and flip back down to 80 by Wednesday, 11 degrees above normal. Hartford, CT's 89 high on Monday was expected to ease to 86 Tuesday and 83 by Wednesday, 12 degrees above its seasonal norm.
Gas at the Algonquin Citygate jumped 58 cents to $3.35, and deliveries to Tennessee Zone 6 200 L rose 86 cents to $3.33. Gas on Dominion South added 14 cents and gas on Tetco M-3 Delivery was quoted 21 cents higher at $1.61.
The heat isn't expected to last long, however. "A blast of cool air will erase the summerlike heat in the midwestern and northeastern United States this week," said AccuWeather.com meteorologists. "Friday marked the official start of autumn, but summer decided to hang around or finally show up across the eastern half of the nation.
"Many areas from the Mississippi Valley to much of the Northeast can expect more 90-degree Fahrenheit weather into midweek and temperatures will be held down a few degrees east of the Appalachian Mountains on Tuesday and Wednesday. However, an increase in humidity as Maria approaches will make the air feel just as hot as Monday.
"Typically in late September, temperatures top out in the 60s in northern New England and the upper Great Lakes to the 70s elsewhere in the Northeast and Midwest.
“For those looking for true fall weather, relief is coming later this week. The same cold front responsible for eventually steering Maria out to sea will be the front that breaks this streak of warmth across the Midwest and Northeast by the end of the week," AccuWeather meteorologist Dan Pydynowski said.
"The much cooler air will reach the central Great Lakes on Wednesday, ending what is expected to be a seven-day stretch of 90-degree heat for Chicago."
Next-day gas prices at other locales firmed as well. Gas at the Chicago Citygate added 6 cents to $2.95 and packages at the Henry Hub were quoted 2 cents higher at $2.97. Gas on El Paso Permian rose 11 cents to $2.47 and gas priced at Northern Natural Demarcation changed hands 13 cents higher at $2.84.
Kern Receipts came in at $2.56, up 6 cents and gas at Malin rose 4 cents to $2.59. Gas at the PG&E Citygate was quoted at $3.24, up 10 cents and deliveries to the SoCal Citygate jumped 27 cents to $3.08.
Overnight weather models turned warmer. "The forecast trends warmer when compared to Friday's expectations, with these changes being largest late in the period in the Midwest where above to near much above normal readings once again emerge following a more seasonal start," said MDA Weather Services in its morning six- to 10-day report to clients. "Above normal temperatures average the period in the Midwest, with the Southwest likewise sharing in a steady coverage of above to much above normal readings.
"The East Coast, however, has high pressure limiting temperatures to seasonal levels, with risks perhaps leaning in the cooler direction in the Mid-Atlantic based on onshore flow and cooler GFS model output."