A 31.6-cent near-month futures dive on Wednesday, continuing futures weakness Thursday and approaching rewarming trends in some of the areas affected by a cold wave brought this week’s three-day cash market rally to an end on Thursday.
Articles from Approaching
Moderate increases were the hallmark of most of the cash market Tuesday as cold fronts approaching the key Northeast and Midwest market areas threatened to have a fair amount of heating load in place by Thursday. Otherwise the bearish influences of moderate weather in much of the rest of the U.S., prior-day screen softness, bulging storage inventories and no Atlantic storm threats to offshore production remained in play.
As the gas futures market continued to fall Monday, approaching the $6/MMBtu area, eastern cash markets tumbled another 25-45 cents on below-normal temperatures and plenty of rain. Perhaps the best bearish indication available was the 40-cent price drop in the New England market despite the complete shut-down of the Sable Offshore Energy Project’s 400 MMcf/d of gas production.
Coming off record 2005 profits approaching a billion dollars, San Diego-based Sempra Energy is looking to solidify more of its high-profile natural gas projects in the weeks and months ahead with cash from some of its ongoing merchant electricity sector sales, according to CEO Donald Felsinger.
All points were up by substantial amounts Tuesday, and many saw major gains approaching or occasionally exceeding a dollar. Then cash traders, in addition to whatever early bidweek business they pursued, spent much of the rest of the day marveling at and/or being mystified by super-spikes throughout Nymex’s energy futures complex, with the natural gas screen skyrocketing by $1.334 to finish at $14.338.
Indicative of the wholesale energy market volatility in approaching winter, Minnesota-based Xcel Energy Monday announced it will lower its electric utility rate increase request to the Colorado Public Utilities Commission by $41.5 million in the wake of what it called “recent decreases in natural gas prices nationwide.”
With Rita fast approaching Gulf of Mexico infrastructure, gas production shut-ins rising rapidly and many traders in transit, the cash market was extremely volatile and illiquid on Thursday. Trading appeared to completely dry up at many locations. Some Northeast averages were more than $5 away from others. Most western locations fell 25-60 cents.
With heat levels starting to ease off in the South and a mild warm-up trend approaching in the Midwest, the diminution of weather-related load was enough to allow prices to retreat across the board Wednesday. Negative prior-day guidance from the screen contributed to the softening effect.
Quite a few points, mostly in the Midcontinent/Midwest and West regions, were moderately higher Wednesday, but except for a few other gains elsewhere, prices failed to see the price rally that some had expected to be generated by an impending bout of severe winter weather in northern market areas.
Weekend prices shot up as high as a little more than 40 cents (Transco Zone 6-NYC) Friday as traders heeded forecasts of seriously colder weather in several market areas early this week. The previous day’s screen gain of 20.3 cents added to the overall bullishness, a couple of sources said.