Load

In an abrupt reversal, Northern Natural Gas ended a System Overrun Limitation (indicating heavy heating load) in all market-area zones Friday and said a System Underrun Limitation would take effect in all zones Sunday “due to the large warm-up expected over the weekend.” A bulletin board posting projected that Northern’s system-weighted average temperature would go from minus 4 Friday and plus 2 Saturday to 19 Sunday and 24 Monday.

A 7.1-cent drop by prompt-month futures a day earlier and the usual negative impact of industrial load loss over a weekend were outweighed by forecasts of continued near-freezing lows in much of North America in rallying most of the cash market to moderate gains Friday.

The cash market finally bowed to futures weakness by falling at nearly all points Thursday despite some increases in heating load due Friday. Even with low temperatures predicted to reach sub-freezing levels at some locations in the northern sections of the South, it appeared that many buyers preferred to start tapping their storage accounts rather than procure more expensive spot gas.

Based primarily on the previous day’s 25.1-cent run-up by October futures, but also getting a slight boost from a pinch of extra cooling load returning to the desert Southwest and parts of the South along with forecasts of Friday lows in the 30s in upstate New York and some New England locations, the cash market was flat to higher across the board Thursday.

A bit of heating load may be creeping into cash market dynamics as overnight lows in the Rockies dip into the mid to upper 30s, and a few parts of the South may see a fair amount of power generation demand Thursday as highs around 90 are due in parts of Florida and the New Orleans area. Overall weather fundamentals remain on the light side for gas prices, but the market recorded increases at nearly all points Wednesday.

The cash market again bowed to a general lack of substantial cooling load and further prior-day futures softness in recording losses at all but one point Thursday. Modest warming trends in the Rockies and western Midwest were due to spur little additional power generation demand for gas.

It mystified traders, but prices were flat to about half a dollar higher across the board Tuesday despite cooling load being light outside the southern U.S. and the previous day’s 12.8-cent decline by August futures.

Cooling load proved to be a stronger influence on the spot market than a Gulf Coast trader had expected Wednesday (see Daily GPI, June 25). Despite the previous day’s 11.8-cent drop by July futures, flat to moderately higher quotes prevailed at most points Thursday of forecasts of highs in at least the mid 80s and often much higher continued to dominate the U.S. weather outlook, while conditions remained fairly mild in most of Canada.

Prices continued to rise at nearly all points Wednesday as the South began contributing some heating load of its own to what already existed from the Northeast through the Rockies. Temperatures were due to keep falling Thursday in the Northeast and sections of the Midwest, but some moderation was forecast for the Rockies.