Cash prices rose strongly Tuesday as the previous day’s energy futures support was amplified by heating load returning to parts of the Midwest and Northeast and cooling load continuing in California and the desert Southwest. Most points saw even bigger gains than on Monday, with overall advances remarkably homogenous through all regions in ranging from about a dime to a quarter.
“Winter’s back!” exclaimed a marketer, saying snow was falling in parts of the Upper Midwest Tuesday, although it wasn’t sticking. She wished the weather would turn warm again, but wasn’t holding her breath, since the weekend forecast called for more snow and temperatures in the 30s.
Meanwhile, overnight lows are on either side of 40 degrees from the Midwest through the Northeast and Mid-Atlantic. However, although New England would get even cooler Wednesday, The Weather Channel anticipates some moderation for the rest of the Northeast and Mid-Atlantic. It also said a cold front would start bringing some reminders of winter to the northern half of the West again after unseasonable warmth in the Pacific Northwest. However, Southwest temperatures likely will continue to approach the century mark.
A Midcontinent marketer didn’t see anything other than Monday’s futures strength to support bigger cash gains Tuesday. She hadn’t heard about snow in Michigan, but said she knew MichCon citygates were very strong. Even with this week’s bullish pricing, the market seemed generally quiet to her.
Most of the eastern half of the U.S. is expected to see below normal temperatures during the May 3-7 workweek, according to the National Weather Service. The exception in the East is a forecast of normal readings in most of the Northeast and along a coastal strip of the Mid-Atlantic states. NWS predicted above normal temperatures throughout the western third of the nation, with a vertical band of normal weather dividing the two extremes.
Citigroup’s Kyle Cooper said his final estimation for this week’s storage report calls for a build between 74 Bcf and 84 Bcf. An injection of that magnitude, which would raise the surpluses to the year-ago and three-year average levels while reducing the deficit to the five-year average, “would be considered bearish on both an absolute basis and on a temperature-adjusted basis,” Cooper added.
Bidweek numbers were moving up along with the screen Tuesday, one trader said. Although Tuesday’s natural gas futures rise of 11 cents to $5.874 was smaller than Monday’s, he saw a chance of testing $6 before the May contract goes off the board Wednesday. The oil products also turned in large gains, with unleaded gasoline realizing another record peak before retreating slightly at the close.
Index premiums are up for May, said an end-user who reported paying the NGI index plus a penny at the Chicago citygate. Storage buying seems to be driving a lot of these price increases, he continued; people have the sense of pay high now, or wait and pay even higher later. Gas also is trading a lot off the oil market’s strength, he said. However, the end-user could see the possibility of September arriving with storage nearly full and neither heat waves nor hurricanes being a major factor in the summer market. Prices would certainly dive then; the question is by how much, he said.
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