Warmer

June natural gas is expected to open unchanged Wednesday morning at $4.80 as traders balance mildly supportive weather outlooks with anticipated high production. Overnight oil markets were mixed.

Natural gas for physical delivery Tuesday overall on average surged 18 cents as traders had to adjust to a changed weather outlook, a firm power pricing environment, and a strong screen. East and Northeast locations led the charge higher, but no delivery point was left unscathed by the tempest of soaring prices. Futures reached the highest point in 3 weeks, and at the close of futures trading September had risen 9.5 cents to $3.463 and October was higher by 9.4 cents to $3.487. September crude oil eased 36 cents to $107.10/bbl.

The overall cash market added just under a dime on average as forecasts for warmer temperatures, pipeline restrictions and higher power prices at eastern points paved the way for well-bid cash trading. Rocky Mountain quotes were firm as well. At the close of trading July futures fell 2.8 cents to $3.800 and August was off 2.7 cents to $3.821. July crude oil eased 26 cents to $95.77/bbl.

Warmer-than-average temperatures are expected this winter in an enormous area stretching from Arkansas west through Arizona and north as far as the Canadian border, as well as the northern two-thirds of Alaska, according to forecasters at the National Oceanic and Atmospheric Administration (NOAA).

Warmer-than-average temperatures are expected this winter in an enormous area stretching from Arkansas west through Arizona and north as far as the Canadian border, as well as the northern two-thirds of Alaska, according to forecasters at the National Oceanic and Atmospheric Administration (NOAA).

A warmer-than-normal winter colored Southern Company’s 1Q2012 financial results, but natural gas issues, and particularly coal-to-gas trends, dominate the current landscape for the Atlanta-based operator, which recently received the first construction/operating licenses for two nuclear units in more than 30 years.

Physical natural gas continued lower Tuesday as the market grappled with a tsunami-like influx of warmer-than-normal temperatures east of the Rockies and the ongoing need to purge storage gas.

Most of the market continued to rise Wednesday, but nearly all of the increases were smaller than Tuesday. Predictions of warmer temperatures approaching, particularly in the Midwest and South and to a lesser extent in the Rockies, create a moderately bearish price outlook through the end of the week.

July natural gas futures rose Friday as traders calculated that expected warmer weather would pare storage injections in upcoming weeks. At the close July had added 3.6 cents to $4.229 and August was up 3.3 cents to $4.250. August crude oil gained 14 cents to $91.16/bbl following a $4.39 plunge on Thursday.