Mild

Pressured by forecasts for mild weather across much of the country, the natural gas futures market tumbled lower Monday as traders completely rescinded Friday’s gains.

Pressured by the combination of mild weather forecasts and bearish storage news expected Thursday, the natural gas futures market continued its downward spiral Tuesday by recording another gap-lower open and a new five-week low.

The cash market saw one of its most synchronized price movements ever Thursday as nearly all points ranged from flat to less than a nickel higher. A couple of scattered points fell up to 4 cents, and a couple of others rose slightly more than a nickel.

Sources expect Tuesday’s generally mild softness to continue as air conditioning load recedes in the East and there is no near-term tropical storm threat to offshore Gulf of Mexico production. As if to reinforce their outlook, the energy futures complex experienced steep price dives Tuesday, with the August natural gas contract falling nearly a quarter and its crude oil counterpart plunging about $2 in expiration-day profit taking.

Hot weather throughout most of the U.S. (with the exception of mild conditions in the Upper Midwest) spurred price increases ranging from about a nickel to 15 cents at nearly all points Monday. Continuation of firming numbers was in doubt, however, due to cold fronts in the Midwest and approaching the Northeast, with the one in the Midwest due to push on into the South over the next day or two.

Despite the summer’s mild beginning through most of June, temperatures in July/August/September will remain warmer than normal from southern Arizona and New Mexico northeastward to the Great Lakes, according to meteorologists at AccuWeather.com. “The last 10 days of June are showing the true nature of the summer temperature and pattern ideas where they are hooked up with each other,” said AccuWeather Expert Senior Meteorologist Joe Bastardi. “Time will tell.”

Following Monday’s strong launch, this week’s northern heat-inspired bull market appeared to be running out of steam quickly Tuesday when a moderate bias to the downside dominated an overall leveling off of cash prices. Several scattered small gains were outweighed by flat showings and losses ranging up to nearly 20 cents.

Much like the week started, mostly flat numbers with a mild tendency to the upside were predominant in most market areas Wednesday. No longer constrained on injections by a partial-day outage of Questar’s Clay Basin storage facility (see Daily GPI, April 14), Rockies/San Juan pricing rebounded from Tuesday’s weakness but in most cases failed to regain as much as it had lost.

Swing prices continued to erode moderately Wednesday as a mild short-term weather outlook and expectations of a reduction in the storage deficit weighed on the market. A largely static natural gas screen had little influence, although crude oil and heating oil futures were realizing gains.