Cool

Relatively cool weather in most of North America has yet to translate into substantive heating load increases; a tropical storm threat remains nonexistent and likely to stay that way through the final two months of the 2011 Atlantic season; and a screen drop of 8.1 cents Friday kept downward pressure on the cash market. The return of industrial load from its weekend decline provided weak market support.

Relatively moderate heat levels in the Mid-South and Northeast, along with mild to cool forecasts for Canada, the Pacific Northwest and sections of the Midwest, failed to prevent a large majority of locations from realizing small price gains Tuesday. However, inland California was beginning to join much of the desert Southwest in anticipating highs ranging from the mid 90s to more than 110, and the Rockies — while still fairly moderate — had predicted peak temperatures start to climb into the low 80s.

Breakeven shale play economics in a low-gas price environment have driven a migration to liquids-rich and oil plays. “Being in liquids is not only cool; it’s profitable,” an investment banker said in Houston last week. “You can produce gas even if you don’t make money on the gas because the liquids are worth so much more.” But maybe now is the time to be a contrarian, she suggested.

Breakeven shale play economics in a low-gas price environment have driven a migration to liquids-rich and oil plays. “Being in liquids is not only cool; it’s profitable,” an investment banker said in Houston Tuesday. “You can produce gas even if you don’t make money on the gas because the liquids are worth so much more.” But maybe now is the time to be a contrarian, she suggested.

Moderate to cool conditions were still dominating the overall forecasts, and as a couple of sources had pointed out, Thursday’s 24.8-cent screen plunge “practically guaranteed” lower prices Friday. They were correct as quotes fell across the board from about C5 cents to 30 cents or so; all drops were in double digits except for those at Empress and NOVA Inventory Transfer in Western Canada.

Mild to cool conditions remain dominant north of the southern third of the United States, yet the cash market got even stronger than before with double-digit increases nearly across the board Tuesday.

Cash numbers continued to defy seasonable to cool weather in many regions for the most part as flat to slightly higher prices remained the norm for a second day Wednesday. The previous day’s loss of 8.7 cents by October futures also had limited impact in dampening the market.

Natural gas futures values spiraled lower Thursday after the 266 Bcf natural gas storage withdrawal for the week ending Jan. 8 failed to set a new all-time single-week record. While the number still came in above most industry estimates, it appeared that some traders were holding out for a decline of more than 274 Bcf, which was recorded for the week ending Jan. 25, 2008 and stands as the single-week record.

A House draft measure that would place the Federal Reserve in the role as back-up regulator in the futures and securities markets got a cool reception from regulators and the House Agriculture Committee last Tuesday.