With a cold front arriving in the Midwest and moderate cooling load due to start receding Wednesday along the East Coast, prices fell at nearly all points Tuesday. Although hot weather will continue from the western end of the South through the desert Southwest, conditions are generally mild enough elsewhere that there is little call for gas either for heating or power generation.
Only a couple of flat to about 15 cents higher Rockies points averted an across the board run of softness. Losses ranged from 2-3 cents to nearly 35 cents; most were in double digits.
The cash market fell despite a modicum of prior-day futures support from the June contract’s rise of a little more than a nickel Monday. Even that support will be missing Wednesday after the June screen retreated by 8.8 cents Tuesday.
A Midwestern marketer said it was still warm and humid in her area early Tuesday but was starting to turn cooler again that afternoon as storms arrived ahead of the cold front. She lamented that personally she would prefer more stable weather to a rapid transition from hot to cold. “We certainly haven’t liked the prices we’ve been seeing lately,” she added, and thus her company has not been making any spot gas purchases so far this week.
The Northeast, which had seen high temperatures top 80 Tuesday, is forecast to reach only the high 70s Wednesday. The moderation of heat will extend along most of the eastern seaboard; Atlanta will barely get to 80-81 degrees Wednesday after peaking in the mid 80s Tuesday.
The upper West may still have a few pockets of heating load remaining but is getting close to having most if not all furnaces turned off for the season. Denver is expecting a high around 70 Wednesday.
Kern River was in the somewhat unusual position of reporting high linepack Tuesday in the farthest upstream of its four segments, yet experiencing low linepack in all three other segments.
El Paso’s Blanco pool in San Juan Basin continued to feel the effect of the pipeline’s maintenance shutdown of the San Juan Crossover through Thursday, registering a drop of about 20 cents (however, the Bondad pool fell only a couple of pennies.
A Midcontinent producer said he saw little buying other than for storage injection purposes. That constitutes the main load for gas currently while weather is generally moderate in most areas, he said. The utilities aren’t buying much, he said, due to 70-degree weather in the market area, “so what are you going to do?”
CenterPoint-East was trading about a nickel above NGPL-Midcontinent, the producer said, and that made the east-west basis spreads that he likes to exploit unfavorable Tuesday.
Weather 2000 reflected a generally bearish near-term outlook for the natural gas market in reporting that violent weather, “but tame net temperatures,” remain the climatic themes this month. “From blazing wildfires to numerous tornadoes to unusually early tropical storms, U.S. weather has been overtly capricious through spring 2007, the consulting firm said in an adivsory Tuesday. But conversely, “while generally warm and spring-like, net temperatures across the nation have been relatively tame the past few weeks…” Certain conditions led some forecasters “to become antsy and jump the gun with calls for consistent northern heat, only to dramatically replace those forecasts with outlooks for a cool summer after the short-term results turned out disappointing (Chicago and Washington, DC, had afternoon temperatures only average out to the upper 70s last week).”
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