Moderation

Cash prices overall averaged a 20-cent drop Friday as weather forecasts called for moderation in the Northeast and marketers cited an abundance of available gas. Rockies, the Midwest and the Gulf Coast were all lower. At the close of trading, December futures had dropped 10.5 cents to $3.503 and January was off by 10.3 cents to $3.634. December crude oil gained 98 cents to $86.07/bbl.

Physical gas prices on average plunged Tuesday as temperature forecasts called for moderation. Particularly hard hit were Northeast points, but quotes elsewhere fell as well. One point in the Marcellus did manage a gain.

Physical natural gas slipped about two cents nationwide Wednesday as weather forecasts continued to show moderation, and analysts were expecting the earliest start to the injection season since 2007. On average, eastern points were off about a penny and on the West Coast next-day deliveries shed two cents to a nickel. Bucking that trend was both the Henry Hub cash and futures markets. March physical deliveries at the Hub were up 2 cents to $2.21 and April natural gas futures added 2.5 cents to $2.360 at the close. May crude oil rose $1.20 to $107.27/bbl.

July natural gas continued to trudge lower Tuesday as traders adjusted to moderation in near-term weather forecasts and cited aggressive selling attempting to trigger standing sell orders. At the close July had fallen 6.5 cents to $4.581 and August dropped 6.5 cents as well to $4.613. July crude oil rebounded $2.07 to $99.37/bbl.

Price drops got larger and occurred across the board Thursday after several instances of firmness had remained a day earlier. An ongoing moderation of temperatures in northern market areas combined with a prior-day dip of 9.3 cents by prompt-month futures to further the cash market weakness.

It failed to surprise any traders when prices fell at all but one point Friday. Despite cooling trends in the Midwest and South, moderation dominated the general weather outlook; the latest storage withdrawal report reinforced the perception of plentiful inventories (especially when the Producing region had an unusually early net injection); prompt-month futures had fallen 4 cents on the previous day; and the decline of industrial load during a weekend was a minor bearish factor as usual.

Natural gas futures retreated Monday as traders quickly reacted to reports of some moderation in private weather forecasts while others attributed the magnitude of the decline to computer-driven sell orders. At the close February natural gas fell 15.6 cents to $4.580 and March retreated 14.5 cents to $4.598. March crude oil lost $1.24 to $87.87/bbl.

The potential for a late summer natural gas price collapse may not be as high as analysts had predicted a few months ago, thanks to hotter-than-expected weather and a moderation in gas supply going forward, but prices aren’t expected to gain much strength for some time, energy analysts predicted.

The general weather moderation in most areas had proven puzzling Tuesday when most points rose a few cents, but it appeared that logical behavior had returned to the market Wednesday as prices fell across the board. The previous day’s futures decline of 1.1 cent, while minuscule, was an added slightly bearish factor in the cash market.