Natural gas prices for delivery Wednesday added an average 10 cents in Tuesday’s trading. Strong pricing in the East and Great Lakes as well as a firm screen were able to offset a mixed Northeast and free-falling quotes in the Marcellus, which ratcheted below $1 and in at least two cases, recorded new all-time lows.
At the close of futures trading, October made a new eight-week high at $3.776 and settled at $3.745, up 0.7 cent, and November had risen 0.8 cent to $3.822. October crude oil fell $1.17 to $105.42/bbl.
Points in the oversupplied Marcellus region were the story on Tuesday as values got hammered and record lows were recorded. Quotes on Tennessee Zone 4 Marcellus plunged 68 cents to average 36 cents, well below the old low for the location of 69 cents, which was recorded for gas to be delivered on June 18, 2012.
Deliveries to Transco-Leidy Line also slumped. The point recorded an all-time low trade of a quarter of a cent before reaching an average of just 34 cents, down 70 cents from Monday, and well below the pricing point’s previous low of 87 cents, which was just notched last Friday for weekend and Monday delivery.
Other Northeast pricing was mixed. At the Algonquin Citygates, gas was quoted for Wednesday delivery at $3.97, down 16 cents, and at Iroquois Waddington next-day packages rose a nickel to $4.11. On Tennessee Zone 6 200 L gas changed hands at $3.93, down 7 cents.
On Dominion gas was quoted at $3.52, up 9 cents, and on Tetco M-3 Wednesday parcels came in at $3.78, up by about 12 cents. Gas bound for New York City on Transco Zone 6 added 15 cents to $3.94.
A Great Lakes marketer reported buying gas well above his company’s September index purchases. “We paid $4.025 today on Consumers and our index price would have been $3.812,” lamented a Michigan marketer.
“We have been attempting to make up a shortfall, and last week we were able to buy a chunk that brought us closer.” The marketer wasn’t sure if his company would be buying on subsequent dips as market direction was uncertain. The marketer also said that his firm was on track to have all of its customers’ storage full by the end of October.
Gas for delivery Wednesday on Alliance rose by 8 cents to $3.89, and packages at the Chicago Citygates were higher by 9 cents to $3.89 as well. On Michcon, gas was seen at $3.97, 8 cents higher, and on Consumers Wednesday packages rose by 9 cents to $4.02. At Dawn, gas changed hands at $4.11, 8 cents higher, and parcels at Northern Natural Ventura rose a dime to $3.83.
In the Northeast, temperatures were to be close to seasonal norms. Wunderground.com reported that the high Tuesday in Boston of 67 was expected to rise to 72 Wednesday and 77 on Thursday. The normal high in Boston is 72. New York’s 66 high Tuesday was anticipated to reach 70 Wednesday and 73 Thursday. The seasonal high in New York is 75. Philadelphia’s 68 Tuesday high was predicted to rise to 70 Wednesday and 79 by Thursday. The normal mid-September high for Philadelphia is 75.
“A cold front boundary extending from the southern Plains to the Northeast coast will bring rain and thunderstorms to the Southeastern states. This front will be well off of the Eastern Seaboard by Tuesday, giving rise to clear conditions in the Northeast,” said Wunderground.com meteorologist Kari Kiefer.
Next-day power prices were mixed. IntercontinentalExchange reported that next-day peak power into the New England Power Pool’s Massachusetts Hub fell $2.97 to $40.09/MWh, and deliveries to PJM West rose 31 cents to $32.89/MWh.
Overnight weather forecasts changed little. “Temperatures are slightly warmer over the Northeast when compared to the previous forecast,” said Andover, MA-based forecaster WSI Corp. in its Tuesday morning six- to 10-day outlook. “Confidence in [Tuesday’s] forecast is near average as a result of reasonably good large-scale model agreement; temperatures could run a couple of degrees colder over the West under a digging cold Pacific low-pressure system.”
Jim Ritterbusch of Ritterbusch and Associates sees “no evidence of an interim top in sight. An improved chart picture appears to have the speculative community on the run, and this short-covering could easily be sustained unless Thursday’s EIA [Energy Information Administration] report offers a significant bearish surprise,” he said.
“The sharp reduction in the year-over-year deficit that was seen in last week’s data is unlikely to be evidenced on Thursday since the injection will likely come in proximate to last year’s 61 Bcf build. Furthermore, the supply hike should fall well short of the five-year average increase of around 74 Bcf. But we also feel that this loss of year over year deficit contraction has been baked in and that the market will need additional weather-related support if this advance is to be sustained. Above-normal temperature views now stretch out to month’s end and are covering almost the entire U.S.”
Market technicians following Elliott Wave and retracement analysis see a case building for higher prices. “Our bearish case has been that this rebound from the $3.129 low was only the bear market correction of the decline from the $3.835 high, and the intermediate term trend was still down,” said Walter Zimmermann, vice president at United-ICAP. “However, this bearish wave count is erased by a decisive break out above the $3.731 level. And natgas appears poised to do just that this week.”
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