Spike

Forecasts of moderately higher natural gas demand, a spike in domestic output, a “healthy and comfortable” level of storage, a slightly warmer winter and a stagnant economy point to flat pressure on wholesale gas prices going into the winter heating season, although there may not be an “overnight impact” on consumer bills, according to the Natural Gas Supply Association’s (NGSA) winter outlook released Thursday.

Getting a major boost from the expiration-day spike of 35.2 cents by July futures, most of the cash market was able to advance Friday. In doing so, it overcame bearish influences such as forecasts of declining temperatures in much of the East and the usual weekend dropoff in industrial load.

As expected after a 41.1-cent spike by June futures the day before, prices increased at nearly all points Wednesday. Only a drop of about a dime by Transwestern in West Texas averted an across the board run of firmness.

Cash prices continued to rise at most points Tuesday, boosted by a futures spike a day earlier and whatever heating or cooling load they could find in various areas. Perhaps in recognition that overall weather-based demand is still on the light side, in nearly all cases the gains were considerably smaller than Monday’s all-points rebound.

Moderating weather trends appeared to trump Monday’s 31.7-cent spike by expiring May futures as the primary influence on cash trading for the end of April Tuesday. The result was mixed price movement in the East in which most points moved up or down by a dime or less. However, mild temperatures in the Rockies and cool conditions in California caused major losses in the Rockies market and mostly lower prices in the rest of the West.

In its first regular front-month session, the June natural gas futures contract on Tuesday took a break from the recent spike to test out lower price values. The contract dipped back below $11 to record a $10.830 low before settling at $10.842, down 48.7 cents from Monday’s close and 43.8 cents lower than May’s expiration.

Monday’s 46.9-cent spike by May futures had its expected impact on the cash market Tuesday; prices continued to rise at nearly all points. A slow warming trend in the Northeast and cooling weather in the central South and Southwest were draining heating and cooling load, respectively, by moderate amounts. But lows in the 20s and 30s in the Rockies, Upper Plains and parts of the Midwest provided a fair amount of residual heating demand.

A 74% spike in crude oil prices since the beginning of 2006 and a 28% dip in the value of the dollar against the euro have substantially affected the competitive positions of domestic energy industries, affecting imports and exports of both gas and coal, and changing usage patterns for natural gas, according to Charles Whitmore of FERC’s Office of Enforcement.

A 74% spike in crude oil prices since the beginning of 2006 and a 28% dip in the value of the dollar against the euro have substantially affected the competitive positions of domestic energy industries, affecting imports and exports of both gas and coal, and changing usage patterns for natural gas, according to Charles Whitmore of FERC’s Office of Enforcement.