The cash market overall averaged unchanged Monday though Northeast points surged, the Mid-Atlantc was flat to mixed, and Gulf points eased lower as mild weather was forecast to grasp the Great Lakes, Ohio Valley and points east. October futures staged a last minute rally and tacked on 13.0 cents to $2.812 and November was higher by 10.8 cents to $2941. October crude oil added 12 cents to $96.54/bbl.
In the Northeast traders saw much stouter prices as Tennessee reported an outage and buyers had to make up volumes. “There’s an outage that started on Tennesse that started on Monday so you couldn’t really do much about it on Saturday or Sunday, and then I think there’s just enough people who short the market over the weekend and have to buy it back or don’t buy their Saturday and Sunday gas and have to cover on Monday,” said a Houston-based marketer.
“It seems like there is always Monday strength relative to say, Thursday for Friday’s business. The outage on Tennessee is at Zone 6 Station 241, and it’s supposed to be all week. You just have to pay up.”
Quotes on Algonquin Citygate rose a healthy 15 cents to average $3.13 and deliveries to Iroquois Waddington were up about a dime to $3.22. Gas for Tuesday delivery on Tennessee Zone 6 200 L surged 23 cents to $3.16.
Next-say prices for the Mid-Atlantic and points west moved little as traders expected mild temperatures.
“Crisp, autumnlike nights, will blanket much of the eastern two-thirds of the country early this week while sunshine compliments pleasant afternoons. The sweeping area of high pressure bringing the change is a big sign that fall is just around the corner,” said Andy Mussoline, AccuWeather.com meteorologist.
He noted that “The refreshing change in air will settle into the country in wake of major cold front that sparked widespread severe weather from the Midwest to the Northeast Friday into Saturday. The two-day severe weather event ended late Saturday night with 462 reports of wind damage, 31 reports of hail larger than a quarter, and two tornadoes. With the severe weather threat long gone, a major shift toward tranquility well settle into the East.”
Tuesday gas into Tetco M-3 was 2 cents higher to average $2.80 and deliveries to Transco Zone 6 New York were flat at $2.80. Quotes on Dominion came in at $2.65, 3 cents lower.
At Clarington next day gas eased a penny to $2.69 and parcels delivered to Lebanon also fell 1 cent to $2.69.
Gulf points were lower. Quotes on ANR SE dropped 3 cents to average $2.59 and deliveries to the Henry Hub were down 7 cents at $2.66. Columbia Gulf Mainline was down 3 cents to $2.62 and gas on Tennessee 500 L lost a cent as well to $2.67. Transco Zone 3 dropped about a penny to $2.65.
Futures traders saw the October contract scoot up right during the closing minutes as talk swirled around of a bullish revision to the weekly storage number..
“This week’s number has been revised downward. Whatever was in the cards this morning got revised downward,” said a New York floor trader.
“Tomorrow this market will be right back down where it belongs.” He added that the market traded in a range from $2.647 to $2.835 but “most of the day we were trading between $2.655 and $2.70 and then made a rally right at the end of the day to $2.835. The last move up was within the last 10 minutes of trading.”
Tim Evans of Citi Futures Perspective forecasts a build of 22 Bcf for the week ended Sept.7, well below last year’s 80 Bcf build and a 71 Bcf five-year average.
Near-term weather forecasts do not look helpful to the bulls’ case. Commodity Weather Group in its six- to 10-day outlook is looking for lower energy demand and shows a ridge of below-normal temperatures centered over Nebraska and Kansas with the Pacific Northwest showing above-normal readings. The remainder of the country is expected to see normal readings.
“Rebounding temperatures later this week for the Midwest and East offer 80s for highs again, but the dew points are considerably lower than last week, and the peak temperatures also struggle to get anywhere close. The result is still relatively low demand,” said Matt Rogers, president of the firm, in a morning report.
“Another cool push drops into the Midcontinent in the second half of the six- to 10-day, which should expand east and south going into the early 11-15. A push of warming is seen working back to the Midwest by mid-late period, but the latest guidance suggests the warming weakens as it comes east, and it may not even reach the coast during the 11-15 [day period]. The West sees occasional heat spikes with mid-upper 90s in Burbank [CA] late this week and some 80s at times in the Pacific Northwest.”
Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm, said, “we continue to hold our current positions. We are looking for the market to work lower over the next two to four weeks.”
He currently advises trading accounts and end-users to stand aside, and producers to hold a medley of positions designed to protect against falling prices. Producers should hold short the balance of the summer at $3.00 to $3.20 and a winter strip initiated earlier at $3.75-3.95. Any winter months above $3.75 to $3.95 should be sold for a “light position.” He also advises to hold on to the remainder of a strip of October $2.50 puts designed to cover the summer strip at 25-27 cents.
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