Weekend and Monday deliveries of physical natural gas overall on average were 4 cents lower in Friday’s trading for weekend and Monday delivery. Thursday’s screen strength was unable to resonate in the physical market largely as the result of moderating weekend weather forecasts.
Only a handful of points made it to the plus column, and the transportation- and infrastructure-challenged Marcellus region led the decline with losses of more than a half-dollar. Mid-Atlantic and Northeast locations posted double-digit losses as well. At the close of futures trading September had shed 6.0 cents to $3.485 and October was off by 5.4 cents to $3.521. October crude oil added $1.39 to $106.42/bbl.
In the Northeast traders saw little reason to commit to weekend and Monday packages. “You are talking a weekend with no weather,” said a Northeast marketer. “Weekend-related demand is off, and Boston is right on average for the most part. Our power customers aren’t buying anything for the weekend.”
He added that transportation issues were ongoing in the oversupplied Marcellus region and the hefty discounts to move gas to market were understandable.
Meteorologists expected mild conditions over the Mid-Atlantic. “Slightly cooler, less humid air will settle over the Philadelphia area this weekend,” said Alex Sosnowski, AccuWeather.com meteorologist. “High pressure from Canada will slide southeastward across the tri-state. However, this high is not quite as cool as some of its predecessors in recent weeks.
“Both days of the weekend will feature a good deal of sunshine with high temperatures slightly below average for the end of August, but still enjoyable for most outdoor activities. Temperatures are forecast to sneak just past 80 degrees.”
Going forward, higher temperatures and storminess will define the weather mix. “Temperatures and humidity will increase [this] week. However, it appears that one or more rounds of thunderstorms will keep the heat at bay during most of the week. The pattern could yield locally gusty storms,” he said.
AccuWeather.com predicted that Friday’s high in Philadelphia of 84 would ease to 82 by Sunday and rise to 85 on Monday. The normal high for late August in Philadelphia is 85. In Baltimore, Friday’s peak of 81 was anticipated to reach 82 on Sunday before rising further to 85 on Monday. The normal in Baltimore is also 85 this time of year. In Washington, DC, the Friday high of 79 was anticipated to reach 82 on Sunday before rising to 86 on Monday. The seasonal high in Washington is 86.
Gas for weekend and Monday delivery to the Algonquin Citygates fell 17 cents to $3.38, and deliveries into Iroquois Waddington were seen 5 cents lower at $3.98. On Tennessee Zone 6 200 L, gas was quoted at $3.43, down 9 cents.
On Dominion gas came in at $3.15, down 11 cents, and deliveries to Tetco M-3 fell 11 cents to $3.38. Gas headed for New York City on Transco Zone 6 retreated 8 cents to $3.47.
Weekend and Monday gas at beleaguered Marcellus points was off by a half-dollar or more. Gas on Tennessee Zone 4 Marcellus tumbled 48 cents to $1.94, and packages on Transco Leidy dropped 61 cents to $1.98.
Other market centers also saw soft weekend pricing. Gas at the Chicago Citygates was quoted 2 cents lower at $3.63, and deliveries to the Henry Hub came in at $3.50, down 2 cents. At NGPL’s Mid-Continent Pool weekend and Monday deliveries were seen at $3.43, down 3 cents, and at Opal gas changed hands at $3.39, down 4 cents.
Futures traders don’t see any protracted move higher or lower. “I think we’ll just sit here between $3.45 and $3.55 for the next few days. We could rally up to $3.60, but that’s about it. There’s not much happening here,” said a New York floor trader.
As Friday’s trading began there were no major changes to the near-term weather outlook, but forecasters were having difficulty with the Eastern Seaboard. WSI Corp. in its Friday morning six- to 10-day outlook said, “There are no major changes from [Thursday’s] forecast, [and] forecast confidence is above average in the central U.S. but closer to normal on the East Coast.
“The I-95 corridor is a forecasting nightmare as several rounds of shower and thunderstorm activity are poised to roll down from eastern Canada. Any of these waves will have the potential to knock daytime temps off the strings, similar to what happened yesterday.”
Analysts see near-term weather limiting any significant price move lower. “With most forecasts still favoring above-normal temps across a broad swath of the country during the next couple of weeks, significant price pullbacks should prove limited,” said Jim Ritterbusch of Ritterbusch and Associates.
“But as the past two weekends have indicated, significant changes in the temperature views can develop within a two- to three-day time period, and these shifts are certainly capable of swinging back toward the cool side. But we are also keeping in mind that the huge price plunge from early May to early August is beginning to have some bite as far as gas to coal substitution is concerned as was on vivid display within yesterday’s supply build that varied considerably by around 12 Bcf compared to average Street expectations.”
Ritterbusch is suggesting a “sideline stance” and sees September struggling to hold prices levels above $3.54.
Tom Saal, vice president at INTL FC Stone in Miami, in his work with Market Profile is looking for active market movement. He first expects the market to test Thursday’s value area at $3.559 to $3.521. Following that, his figures suggest tests of value areas at $3.477 to $3.465, $3.379 to $3.367, and $3.615 to $3.579. Saal is not specific in his timing, but typically the test of $3.559 to $3.521 would precede tests of the other value areas.
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