Reluctant

Physical natural gas for weekend and Monday deliveries fell nearly 8 cents Friday as traders were reluctant to make purchases given the large amount of gas available and limited demand in a number of areas.

Cash prices overall dropped an average 6 cents Friday as traders were reluctant to make purchases before a long holiday weekend when many locations were forecast to see load-dampening effects of the remnants of Isaac. California points were firm, Eastern points slumped, and Gulf locations were steady to lower. At the close of futures trading October had risen 5.1 cents to $2.799 and November was up by 4.4 cents to $2.963. October crude oil jumped $1.85 to $96.47/bbl.

Physical prices for the long weekend and Monday tumbled in Thursday trading as buyers were reluctant to make purchases ahead of anticipated reduced industrial load. Midwest points showed relative strength, but Northeast locations recorded healthy drops as weather conditions were expected to remain at seasonal levels.

September natural gas inched higher Wednesday as traders noted a less supportive weather environment, but they were reluctant to initiate any new positions prior to the release of a key government inventory report Thursday. At the close September was up 0.1 cent to $3.933 and October had added 0.1 cent to $3.943. September crude oil rose 93 cents to $87.58/bbl.

The two-day stampede, in which April natural gas futures rose more than 40 cents, came to an end Friday as trade and commercial accounts were reluctant to carry long positions over the weekend and sold into local and short-term trader buying. The April contract fell 5.1 cents to $7.269, and the May contract retreated 2.9 cents to $7.406. Friday’s softness, however, did little to reclaim last week’s gains with April posting a 34.5-cent advance for the week.

With some state regulators reluctant to allow natural gas utilities to enter into long-term contracts for supply, including liquefied natural gas (LNG), a former Department of Energy (DOE) official envisions a scenario potentially developing in which intermediaries — nonregulated entities — step up and assume the risk by purchasing LNG-sourced gas and then selling it to the utilities.

With state regulators reluctant to allow natural gas utilities to enter into long-term contracts for supply, including liquefied natural gas (LNG), a former Department of Energy (DOE) official envisions a scenario potentially developing in which intermediaries — nonregulated entities — would step up and assume the risk by purchasing LNG-sourced gas and then selling it to the utilities.