With temperatures creeping slightly higher in several regions and some — albeit quite modest — prior-day screen support, cash prices managed to rebound by mostly moderate amounts at a solid majority of points Monday. The market also got a bit of backing from the return of industrial load from its typical weekend slump.
A few flat to barely lower points, mostly in the West, kept the rally from extending all the way across the board. The Northeast tended to see most of the largest gains; overall, they ranged from just under a nickel to 30 cents.
The market certainly isn’t in for the widespread heat waves that gave it such a goose from the last half of July through early August. But a mild warming trend is in place. In many cities such as Boston, Chicago, Miami and Kansas City, rises in daily highs from Monday to Tuesday were predicted to be measured by only 1-3 degrees or so. The warming is a bit more pronounced in the Rockies, with Denver expected to go up 5 degrees into the low 90s Tuesday.
Regardless, traders said they were seeing a little more buying interest from power generation interests Monday than they had been late last week.
A Gulf Coast producer said he “would guess” that prices will be firmer again Tuesday, but he noted that most of the natural gas futures weakness Monday had occurred after cash trading was completed, which made predicting Tuesday’s cash direction something of a toss-up. September gas settled 10.7 cents lower Monday despite a dollar-plus gain by the crude oil contract as global geopolitical tensions again put crude traders on edge.
The producer said he was watching a sort of disagreement between Transco and Florida Gas Transmission over their interconnect in St. Helena Parish in South Louisiana. Recent changes in Transco’s operation of the interconnect “have made it almost physically impossible” to get gas delivered into FGT there, he said, adding that the interconnect is where a lot of FGT market-area buyers with primary firm transportation like to make their production-area purchases.
A marketer said Northeast weather is getting a bit warmer for the next two days, “and also more humid, a buyer told me.” Although actual daily highs won’t be terribly impressive in the low to mid 80s, he said, heat indexes are likely to be in the low 90s. There was some “aggressive buying” in the region as a result, he said.
Cash quotes were going up in late trading, the marketer went on, and although that often signals which way they will continue to move the next day, he didn’t think that necessarily translated into higher physical prices Tuesday because the screen was continuing to go lower in Access activity Monday afternoon. Those two opposing influences made making a call on the Tuesday market something of a toss-up, but his feeling is for mild softness, he said. There doesn’t seem to be quite enough returning power generation load to keep the screen’s dime loss Monday from taking cash lower.
Although some have started to wonder whether the 2006 Atlantic hurricane season might be a “bust” in the sense of gas price-boosting storms, writing off the season at this would be very short-sighted, Weather 2000 advised clients Monday. “You should now be bracing yourself for a noticeable uptick in the 2006 hurricane season,” the consulting firm said. “As we advised last Wednesday, our research now strongly indicates that a hemispheric and tropospheric transition is under way that would ignite significant Atlantic Basin tropical activity during the final two weeks of August. Such favorable atmospheric transitions tend to light up the entire Atlantic Basin (from Texas to Africa) ‘like a Christmas tree,’ and historically have supported three, four or even five named storms (i.e., 1995), alive simultaneously.
“All we have to do is recall the 2002 season that produced ‘only’ three named storms through this date and then rattled off eight named tropical storms in September alone! Keep in mind that the fourth or “D” tropical storm of the season climatologically forms on August 22nd, and major Gulf-impacting hurricanes such as Andrew, Lili, Ivan, Katrina and Rita all did so after [Monday’s] date of August 21st.”
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