Waves

There were no blizzards or major heat waves in the near-term sights of the weather radar, but spot prices managed to rebound by large amounts across the board Tuesday from the depths to which they had sunk on Friday. They did have support from both Friday’s 22-cent futures gain (which broke a string of downward sessions) and the return of industrial load from the extra losses it incurs on a holiday weekend.

Although no major heat waves were on the weather radar outside the continuing one from the south-central U.S. through the Southwest, modest warming trends in the Midwest and parts of the Northeast and South, along with the previous day’s August futures increase of 8.8 cents, were enough to generate price increases across the board Thursday.

Enduring an unpredictable week of violent storms, heat waves and the rollercoaster-like antics of the natural gas futures market, cash points on Friday moved in lockstep lower, with most points shedding just a few pennies up to 15 cents.

Reading the handwriting on the waves from state rejections last month of a similar project, the sponsors of the Clearwater Port liquefied natural gas (LNG) project off the Southern California coast late Tuesday offered to take stepped-up air emissions mitigation measures. They made the pledge to federal and state air quality regulators.

The rise in cash prices — prompted by widespread heat waves and a lengthy string of futures advances — continued Wednesday, but signs were surfacing that Wednesday likely represented the market’s peak this week and softness would be setting in Thursday.

As sources had expected earlier, the back-and-forth pattern of cold waves kept a midweek rally limited to two days and led to an across-the-board price retreat Thursday. Only the Florida peninsula was still seeing highs above 70 that day, but prospects for a moderation trend going into the weekend pushed averages lower by about a nickel to as much as 35 cents.

Buoyed by waves of short-covering, the natural gas futures market turned higher Friday as traders alleviated oversold conditions and took back a portion of last week’s considerable losses.

After spiking higher on the news that 123 Bcf was pulled from storage during the previous week, natural gas futures snapped back to unchanged as traders tried to get a better read on bullish weather forecasts circulating the market. After trading just above unchanged from Thursday’s close for much of Friday’s session, the February contract was boosted at the closing bell by a round of short-covering. It closed at $5.344, up 9.3 cents for the session, but 7.6 cents below its high for the day.

Amid two momentous selling waves, natural gas prices tumbled lower in dramatic fashion Thursday, as traders looked past bullish weather forecasts to focus on the undeniably bearish supply situation. Sellers were fast out of the chute as profit-takers pressured the January contract to a gap-lower open. However, that was only the beginning. After it was announced that only 81 Bcf had been drawn from storage last week, the heavy selling resumed. The January contract settled at $2.555, down 12% or 35.6 cents for the day.