Prices were mixed on either side of flat Monday, but the market as a whole leaned decidedly to the downside. Not much appreciable heating load remained outside the Upper Plains and Rockies.
Highs in the 80s from Texas through the Southeast and up the East Coast as far as Boston indicated some developing cooling demand, but temps were expected to rachet back down the rest of the week and sources didn’t see enough of it to hint at any big price rallies.
All movement, either up or down, was fairly small at around a dime or less. Only Permian Basin/Waha and California were solidly rising, while the Gulf Coast and Midcontinent, while including a few flat to barely higher points, were mostly a bit softer.
Cash started lower, but then began moving up around 9:15 a.m. CDT, according to a Gulf Coast marketer. He reported seeing Tennessee in Louisiana in the mid $5.40s early, but it had risen by about a dime in later deals, he said. With the screen going lower in the afternoon (daily settlement was down a dime to $5.509) following the cash move upward, it might have looked like a conflict of influences was shaping up for Tuesday prices, the marketer continued. However, the screen negativity appeared to be prevailing, he said, because a few Dominion deals getting done Monday afternoon for Wednesday flows were about 8 cents below Monday’s levels.
The marketer said he was selling a pretty good amount of gas to power generators, but the demand growth was uneven. Some bought quite a bit more than usual, but others didn’t, he said.
An indicator to the major turnabout in Northeast weather since a week earlier came from a utility buyer who said he understood that the Boston Marathon was run Monday in much warmer than usual temperatures (The Weather Channel had predicted a high of 84 degrees for the city Monday, but also said a cold front would be backing off the warmth a few degrees for the next couple of days). But he wasn’t finding much air conditioning load in the region yet. “We sold some in [Transco] Zone 6 territory, but couldn’t be sure if it was [to be used] for power generation or storage use,” he said. “Niagara prices weren’t working that well for us today,” which he believed was due to Niagara getting bid up in competition with storage gas demand at the Dawn Hub.
After the screen started out in positive mode, but then went into the red that afternoon, the buyer said he would presume gas was “following the oil” lower again at Nymex. Asked about the debate over whether oil and gas prices are linked, he said his theory is that gas suppliers try to link them when oil is pulling gas higher, but if oil heads downhill, “then the suppliers want to switch” to fundamental or other factors in market psychology to keep gas from following suit.
Another eastern utility buyer said the “weather is great here.” That is depressing gas prices some, he added, “but it makes me feel great. The weather is due to change soon, but prices are going to stay down even when the nice weather leaves. Storage is in place and there is very little demand with mild temperatures in the South.”
Citigroup’s Kyle Cooper said his final estimation for this week’s storage report looks for a build between 20 Bcf and 30 Bcf.
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