In Thursday's physical trading gas for Friday and the extended weekend found few buyers as weather forecasts called for a sharp near term drop in temperatures. Packages over the extended holiday weekend at New England and Marcellus points raced each other lower with both sporting losses approaching $1. Mid-Atlantic locations also lost by double digits, and producing regions also experienced losses. Futures managed to rise after a storage report continuing to show large injections well above historical levels. The Energy Information Administration's reported injection of 100 Bcf was almost precisely what traders were looking for, and if for no other reasons than the market failed to spiral lower as it had done on previous occasions, futures gained ground. August was 4.9 cents higher at settlement at $4.406, and September rose 4.7 cents to $4.395. The Dow Jones Industrial Average closed above 17,000 for the first time following a stronger than expected employment report.
Temperatures were forecast to drop sharply Friday at eastern points as Hurricane Arthur was expected to lower temperatures before heading to the Northeast out to sea. The National Weather Service in suburban Philadelphia reported that "Hurricane Arthur will pull away from the middle Atlantic coast and move off to the northeast early Saturday. Meanwhile...a cold front will cross the region tonight [Thursday] followed by high pressure for the weekend. The high will slide across the Ohio Valley and then shift to the south and east of the area, anchoring over the western Atlantic Sunday night into Monday. A Lee side trough looks to develop across our area on Monday and persist through Thursday, [and] a low pressure system well to our north will slowly push a cold front into the region Wednesday and Thursday."
Forecaster Wunderground.com said the high Thursday in Washington, DC, of 91 degrees was anticipated to reach "only" 82 on Friday before reaching a toasty 96 on Monday. The seasonal high in Washington is 88. Philadelphia's 93 high on Thursday was seen plunging to 78 on Friday but then rising to 93 on Monday. The normal early July high in Philadelphia is 84. Boston's maximum of 92 Thursday was seen sliding to 79 on Friday before mustering a gain to 89 Monday. The normal high in Boston this time of year is 81.
Quotes at the Algonquin Citygates for Friday through Monday tumbled 90 cents to $3.11, and gas on Iroquois Waddington shed 35 cents to $4.18. Deliveries to Tennessee Zone 6 200 L fell 79 cents to $3.22.
Mid-Atlantic prices didn't fare much better. Gas bound for New York City on Transco Zone 6 dropped 78 cents to $2.36, and deliveries to Tetco M-3 plunged 69 cents to $2.42.
Industry observers said they can't dismiss the likelihood of a normal or even warmer than normal upcoming winter. "Just suppose there is a mild winter this winter," said a Houston pipeline veteran. "We could come out with a pretty good overhang in storage, and the numbers don't support putting in the high volumes we are now. Say we are putting in 70 Bcf weekly next year versus the 100-plus Bcf we are now because the demand isn't there.
"Could that happen? Yes. You will see prices way below where they are now. Next summer already you see prices 40 cent to 50 cents below where we are now."
August 2015 futures settled Thursday at $4.06, or about 35 cents less than August 2014.
"Potentially the market is saying that we will come out of winter 2014-2015 OK, if not oversupplied. You have to remember that a lot of people are tying in wells right now during the summer, and that gas will probably start flowing in the next two months. If you take what's going to happen to supply, and leave out the market side of things, we will probably have a lot more supply coming on in the next few months that wasn't being worked on as much during the winter. Certain areas are going to get oversupplied." He suggested that Tennessee Zone 4 Marcellus and Transco Leidy might fall into that category.
In Thursday's trading gas for the extended weekend on Transco Leidy fell 91 cents to $2.07, and deliveries on Tennessee Zone 4 Marcellus retreated 90 cents to $1.95.
Producing regions didn't fare very well either. Gas on CIG shed 21 cents to $3.97, and deliveries to Cheyenne dropped a dime to $4.15. Gas at Opal was seen 13 cents lower at $4.12, and packages on Transwestern San Juan changed hands 22 cents lower at $4.10.
Arthur had not gone away as of 5 p.m. EDT Thursday. At that time the National Hurricane Center (NHC) said Hurricane Arthur was 35 miles south of Cape Fear, NC, and was sporting 90 mph winds. It was moving to the north-northeast at 13 mph, and "the core of Arthur is expected to pass near or over the coast of North Carolina and the Outer Banks tonight [Thursday]. The center of Arthur is forecast to pass east of the Mid-Atlantic coast Friday and approach Nova Scotia Friday night."
Joe Bastardi at WeatherBELL Analytics sees Arthur hitting the Outer Banks. "Consider that the pressure is down 12 millibars (mb) in 24 hours and it's now coming into the best area for intensification. Basically, the ECWMF [European model] is in line with us. It has this to 967 mb with 85 knot winds by tomorrow morning. The track NHC has is right on ECMWF but it is disturbing to see models notorious for being too far east being farther west. The GFS [Global Forecast System] track is from Cape Lookout to Oregon Inlet, which is the worst path possible for the Outer Banks."