The strong rise of 18.8 cents by October futures going into the holiday weekend was about the only rationale for higher prices in most of the cash market Tuesday as weather fundamentals were decidedly mild for early September in most areas.
Rockies, California and some Midcontinent/Midwest locations were where most of the declines of a couple of pennies to about a dime occurred. The rest of the market was flat to approximately 20 cents higher, with the cooling Northeast recording most of the double-digit gains. Cash traders will have negative Nymex guidance Wednesday after the prompt-month futures contract fell 8.7 cents Tuesday (see related story).
Tropical Storm Hermine was tending to keep much of Texas relatively cool as it traversed its way northward toward a Wednesday trek through Oklahoma and then on into the Midwest. The remnants of Gaston southeast of Puerto Rico were not expected to redevelop, the National Hurricane Center said, and a low-pressure area and tropical wave in the eastern Atlantic not far from the shores of West Africa were also given low odds of strengthening significantly.
With milder weather covering most of the United States and Canada outside the desert Southwest, transportation constraints are fairly negligible. The Northern Natural Gas bulletin board illustrated how cool it’s getting in the Upper Midwest. Saying its normal system-weighted temperature at this time of year is 64 degrees, the pipeline projected an average of 59 Tuesday before “warming up” to 63 and 66 on Wednesday and Thursday, respectively.
A Gulf Coast trader found it a bit surprising that most eastern prices were up a little “because there’s not much warm weather left any more.” Even in Texas, which had seen record-setting heat for much of August, temperatures were pretty mild due to Hermine’s cooling rains as the storm traveled northward across the state, she said.
It’s “very fall-like already,” a Midwest marketer observed, so she also was puzzled about prices being mostly higher. Her area could expect daytime temperatures no higher than the 60s to continue at least into early this weekend.
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