Cash quotes overall fell 7 cents Tuesday as Northeast points reacted to an expected moderation in temperatures as well as weaker power prices and led the march lower. Eastern points weren’t too far behind, and gas for delivery Wednesday into the Great Lakes area slid about a nickel. July natural gas slid 9.2 cents to $3.647 and August dropped 9.0 cents to $3.670. August crude oil added 14 cents to $95.32/bbl.
In the Northeast, falling next-day power prices along with some relief from searing temperatures softened next-day gas prices. IntercontinentalExchange reported that peak next-day power for delivery Wednesday into the New England Power Pool’s Massachusetts Hub fell $15.48 to $63.98/MWh. Power into the PJM West Hub was quoted at $69.12/MWh, down $7.11.
Forecaster Wunderground.com predicted falling temperatures at major eastern points Wednesday. It said the high in Boston Tuesday of 95 would recede to 86 on Wednesday and 82 on Thursday. The seasonal high in Boston is 79. New York City’s high of 100 Tuesday was expected to ease to 90 on Wednesday and 86 on Thursday. The normal high in New York is 82. Philadelphia’s Tuesday high of 91 was predicted to slide to only 90 by Wednesday and by Thursday it was anticipated to fall to 86. The normal high in Philadelphia is 83.
Next-day gas prices in the Northeast posted double-digit losses. At Algonquin Citygate, Wednesday gas was quoted at $5.18, 30 cents lower, and gas into Iroquois Waddington shed 19 cents to $4.53. Deliveries to Tennessee Zone 6 200 L fell 40 cents to $4.97.
Eastern points were generally lower, but gas delivered on Transco Zone 6 into New York jumped 33 cents in spite of moderating temperature forecasts. “Prices on Transco Zone 6 into New York started at $4.16 and one client delayed and ended up paying $4.64 to me,” said a northeast marketer. “It was all about power demand, and we bought some gas and transported it and made a little money. Apparently next-day power at $72 can support gas purchased at $4.60,” he said.
IntercontinentalExchange disclosed that peak power for next-day delivery into western New York (Zone A) fell $18.21 to $47.79/MWh; power into eastern New York (Zone G) fell $8.79 but was seen at a relatively lofty $72.59/MWh.
Gas for delivery to Dominion changed hands at $3.58, 12 cents lower, and on Tetco M-3 next-day packages were seen at $3.87, down 14 cents. Gas on Transco Zone 6 into New York City was quoted at $4.60, 33 cents higher.
The wide differential between Dominion and Tetco M-3 garnered some attention. “It looks like Marcellus gas is getting backhauled on Tennessee to Dominion at Leidy,” the northeast marketer said.
Gas across the Great Lakes worked lower, but marketers were not ready to buy, at least not yet. With bidweek trading under way, a marketer remarked, “We don’t have too much gas to buy in July, so I don’t think we will be getting that much. We went into the market strong in June, so we might just hold back here.
“We did not buy on Michcon today because there is not all that much more to get. The price has been coming down, so maybe it will be better to buy tomorrow.”
On Alliance, next-day gas fetched $3.82, 4 cents lower, and at the Chicago Citygates, Wednesday parcels were seen at $3.82 also, about 7 cents down. On Consumers, gas was quoted at $4.00, about 7 cents lower, and on Michcon next-day gas changed hands at $3.94, 3 cents lower. At Dawn, Wednesday gas traded at $4.08, down 5 cents.
Much to the delight of the bears, weather forecasts continue cooler. In its Tuesday morning six- to 10-day outlook, WSI Corp. showed above-normal temperatures west of the Continental Divide, but a broad ridge of cooler-than-normal temperatures is centered over southern Illinois and extending as far north as Wisconsin and to Mississippi on the south. To the east it reaches Ohio and Nebraska on the west.
“[Tuesday’s] forecast trended cooler over the central and southeastern U.S. when compared to yesterday’s forecast. Confidence is near average based on reasonable agreement between the latest model runs, [and] model trends are to the colder side over the central U.S. with regards to a digging trough.”
WSI forecasts the next couple of days to be warm, but beyond Thursday, temperatures are expected to hover at or below norms. Boston, for example, Thursday is expected to see a high of 77, and that temperature pattern continues well into next week. The normal high in Boston is 80. Chicago’s high Thursday is expected to be 81, but thereafter for the next week highs are not expected to make it out of the 70s. The seasonal high in Chicago is 84.
Jim Ritterbusch of Ritterbusch and Associates said Tuesday, “While we had expected a return to a $4 handle last week, the shift in the short-term temperature forecasts rendered such an up move unattainable for now.
“Consequently, we are still sidelined as far as a trading posture is concerned, but we see the odds of fresh multi-month lows during the next couple of days as being much greater than a 10-cent bounce off of [Monday’s] settlement. We see staunch technical resistance at about the $3.84 level, and such a rally would provide opportunities in re-establishing some longer-dated back spreads such as summer 2014 vs fall 2013.”
Ritterbusch is long term bearish and said, “we have alluded to the possibility of a decline to around $3.55 that will likely be applicable to the August contract that acquires prompt month status at the end of this week. However, we are still being selective as we await a possible price rally to a $4 handle to establish an outright short position in the fall contracts. We will look to establish bear spreads on a rally to around 3.84.”
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