Cash prices ended the week on average about a dime lower as a cold front pushed through a number of East and Northeast delivery points and traders were reluctant to make purchases for over the weekend. Only one point was unchanged and all others were unable to climb out of the loss column.
New England and Eastern points were particularly hard hit, and the Midwest and Gulf registered losses as well. At the close of futures trading August expired 9.5 cents lower at $3.010 and September had skidded 7.5 cents to $3.015. September crude oil added 74 cents to $90.13/bbl.
Northeast points took a dive as a strong cold front ripped through New York and Pennsylvania, dropping temperatures along with next-day gas prices. “I don’t see any jump up in temperatures for the next few days,” said a New England marketer.
He added that the decline on Algonquin and other pipes in the area was consistent with traders not wanting to go into the weekend knowing there would be less industrial demand as manufacturing facilities were idle.
The line of storms that sliced through the Northeast was expected to keep temperatures lower throughout the weekend. “The showers and thunderstorms throughout the East will also prevent temperatures from significantly soaring this weekend. Temperatures will fail to crack the 90-degree mark across much of the Northeast as triple-digit heat becomes absent from the Southeast,” said Kristina Pydynowski, senior meteorologist at AccuWeather.com. “As the weekend comes to an end, the unsettled weather will not follow suit. Instead, additional rounds of showers and thunderstorms are expected to close out July.”
Weekend and Monday gas at the Algonquin Citygate and on Tennessee Zone 6 200 L dropped about a half dollar. Deliveries into Iroquois Waddington fell close to 40 cents.
Other eastern points weakened as well. Gas on Dominion and parcels into Clarington each were nearly a dime lower. At Tetco M-3 gas shed about 20 cents, and on Transco Zone 6 New York weekend and Monday gas was off by a quarter.
Gulf locations were lower by more than a nickel at some locations. Henry was down by a couple of pennies, and ANR SE fell close to a nickel. Tennessee 500 L was off by close to a nickel and Tetco E LA and Columbia Gulf Mainline shed a few pennies more.
In the Great Lakes all points fell. Chicago Citygate, Michcon, Consumers and Alliance all fell a little more than a nickel.
Futures traders are maintaining a bullish outlook for now. “This market saw some significant selling [Friday], largely in response to a lack of bullish updates to the temperature views. Although above-normal temps are still anticipated on balance, the key upper Midwest region is expected to see more seasonal patterns, a development that has curtailed buying interest as this week has progressed,” said Jim Ritterbusch of Ritterbusch and Associates.
“Despite [Friday’s] selling, the front switch managed to maintain an inversion into today’s expiration of the August contract, a continued bullish portent in our view…[W]e look for a Monday volatility spike off of weekend temperature updates to be followed by some Tuesday consolidation with values likely rebounding by mid week in anticipation of another downsized storage injection on Thursday.”
Ritterbusch is “maintaining a short-term bullish view in anticipation of fresh highs in the newly prompt September contract where values could easily stretch up to about the $3.24 area prior to a sizable price decline as the summer begins to wind down.”
Warm weather and the commensurate power burn are important components to the bullish case, yet expectations are that at least a few cities in the Midwest will see some, albeit short-lived, incursions of cooler air. “A brief, cool break in the extreme heat is on the way for folks staggering under blazing sunshine and triple-digit temperatures much of the summer over the central Plains,” said Alex Sosnowski, meteorologist with AccuWeather.com.
The National Hurricane Center in its 2 p.m. EDT Friday report said there were no tropical cyclones expected in the succeeding 48 hours. The folks at AccuWeather.com, however, were watching a “strong disturbance that moved off the coast of Africa over the Atlantic Ocean earlier this week [and] is being watched for development next week.”
Meteorologist Dan Kottlowski said, “The system is a bit farther south and is the strongest of the disturbances thus far this season originating from Africa.” As a result of a more southerly locations, it is somewhat more removed from dry air and dust that has inhibited development of the systems moving westward off of Africa thus far. He said the dust is still there, but the amount of dust has backed off a bit in recent days.
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