Cash prices overall rose an average 8 cents Wednesday as traders had to reconcile volatile trading in the Northeast with a Southern California heat wave. South Texas quotes were also firm. Futures traders are expecting the Energy Information Administration’s (EIA) storage figure Thursday to come in well below historical averages. At the close of futures trading October had added another 7.1 cents to $3.063 and November had gained 8.7 cents to $3.191. October crude oil had fallen 16 cents to $97.01/bbl.
Northeast prices generally outpaced the gains nationally as traders had to reckon with weather, maintenance outages and increasing screen prices. “There was a little bit of weather along with an outage along Tennessee Station 245. Sable Island production is supposed to come back tomorrow [Thursday],” said a Northeast marketer. “Gas prices started kind of high but really fell apart. There were declines of as much as 60 cents. Tennessee and Algonquin Citygate were as high as $3.80 but fell hard down to the $3.30s in afternoon cycle trading.
“It was also partly driven by the Nymex. People expect the storage number to be low,” the marketer said.
Quotes on Algonquin rose 27 cents to $3.71 and deliveries to Iroquois Waddington were flat at $3.52. Gas on Tennessee Zone 6 200 L gained 10 cents to $3.66. Eastern prices were also firm. Next-day gas on Dominion added 11 cents to $2.96 and at Tetco M-3 Thursday gas rose 7 cents to $3.08. Quotes on Transco Zone 6 New York were 10 cents higher at $3.10.
On the West Coast prices firmed as well boosted by a heat wave in Southern California. AccuWeather.com forecast that the high in Los Angeles Wednesday of 82 would rise to 86 by Thursday and 93 on Friday. The normal high in Los Angeles this time of year is 84.
The National Weather Service in Los Angeles said “A high pressure system should arrive by Thursday to bring fair skies…and will warm the afternoon temperatures to above the seasonal normals through the weekend. The high will weaken by Sunday as a low will approach for a cooling trend an increasing coastal cloudiness and fog.”
Gains in the California market were generally well above the national average. At Malin quotes came in 8 cents higher at $2.90, and at PG&E Citygate gas for Thursday delivery rose 11 cents to $3.42. SoCal Citygate was a hefty 14 cents higher at $3.37 and at the SoCal Border next-day gas added 15 cents also to $3.28.
South and East Texas points were also firm. NGPL TX OK jumped 12 cents to $2.91 and quotes at Carthage added 9 cents to $2.89. At the Houston Ship Channel next-day gas was quoted 10 cents higher at $2.97 and at Katy Thursday deliveries went for $2.96, up 8 cents. Gas at Transco Zone 1 gained 8 cents to $2.90.
Much of the recent futures advance has been fueled by suggestions of a lower-than-expected build in Thursday’s EIA inventory report. Tim Evans of Citi Futures Perspective has calculated a thin 22 Bcf addition, and Ritterbusch and Associates is looking for 28 Bcf. A Reuters survey of 25 market players showed an average 28 Bcf with a range of 19 Bcf to 39 Bcf. Bentek Energy, utilizing its North American flow model, calculates a build of 23 Bcf.
Last year a plump 80 Bcf was injected and the five-year average stands at 72 Bcf.
Directional traders, or managed money, prior to the recent two-day advance showed a somewhat ill-timed preference for the short side of the market. In the Sept. 4 Commitments of Traders Report, figures showed a more than three-to-one bias toward short futures and options positions. When contract sizes are taken into account, short holdings on both IntercontinentalExchange and the New York Mercantile Exchange rose by 14,641, and long futures and options rose by 3,921. The next Commitments of Traders Report may tell a different story.
This is the time of year when utilities start laying in their supplies for the upcoming heating season and send out requests for proposals. Given the uncertainty of winter and the improvement in the technical chart patters, a little more incentive is needed to begin purchases for the end-user sector.
Students of Elliott Wave and retracement analysis don’t see a top to the market. “[W]e see very little evidence a high is in place. For now, we will be viewing any pullback as corrective and looking to the ratio retracements of the move up from $2.647 for support. As long as natgas can remain above $2.783, a test of $3.127-3.153-3.173 (1.618 a=c) will be anticipated,” said Brian LaRose of United-ICAP.
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