Natural gas cash market prices across the country on Monday were mostly neutral to slightly down as traders kept a watchful eye on a strengthening tropical wave off the West African coast that could become the first real threat to the United States of the 2009 Atlantic hurricane season.
Gains in the East ranged between a few pennies to 17 cents higher with a few marginal declines sprinkled in. Gulf Coast points, which continued to weather a force majeure at Enterprise Product Partners LP’s High Island Offshore System LLC’s HIA-264 compressor complex (see related story), recorded mixed action as well with gains and losses of a few pennies throughout the region. The force majeure was still in place following an equipment fire last week that caused significant damage to compression, power generation, communications and other facilities (see Daily GPI, Aug. 6).
Continued weak fundamentals in the form of too much supply and not enough demand helped push most Midcontinent points lower on Monday. The region saw drops of less than a penny to 7 cents on the day. In the Rockies and out West there was more of the same, with declines of a few cents up to 14 cents.
A West Coast trader said things really were not much different than on Friday. “We are seeing prices mostly flat to Friday and flat to next month,” he told NGI. “We are seeing spreads of 40 cents from the north and about 10 cents to the south. Apparently there is some heat in front of us so we are seeing generation go that way instead of California.”
The trader noted that the rangebound futures market has not been offering much guidance for cash prices. “Futures have been stuck in this broad area from $3.500 to $4.500 for some time, so it is hard to get really excited by the screen’s recent moves,” he added. “We occasionally have a promising rally, but each time the move lacks any follow-through momentum. The fundamentals are still weak for bulls.”
Traders in both the cash and futures markets were taking notice of the stirring tropics on Monday after a lackluster storm season to date (see related story). The National Hurricane Center was keeping its eyes on a few tropical waves, while AccuWeather.com meteorologists were tracking one “vigorous” wave in particular that had materialized off the West African coast over the weekend and was still holding together on Monday.
“A low-level circulation of clouds suggests that this wave could be the first wave to develop off Africa this hurricane season,” said Eric Wanenchak, an AccuWeather.com meteorologist. “The eastern Atlantic is an area which we typically look for development as we approach the latter half of August, as conditions become more favorable.” He noted that while current factors in place could restrict development, there is a chance that tropical depression status will be reached over the next few days.
“Whether the wave develops or not, it will have no direct weather impact upon the eastern United States before at least the latter half of next week, if at all,” he said.
The West Coast trader said while it only takes one properly placed hurricane to drastically alter the energy price landscape, he currently is not bullish on the 2009 Atlantic hurricane season. “The season has been downgraded,” he said. “The system in the Atlantic right now is still only a wave, so there is no fear of a Gulf of Mexico strike right now.”
Late last week the National Oceanic and Atmospheric Administration said that while the quiet start to the 2009 Atlantic hurricane season does not guarantee the next four months will remain calm, the number of tropical storms likely to form this year is lower than originally predicted (see Daily GPI, Aug. 7).
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