IN THE NEWS / Natural Gas Commentary
NYMEX Natural Gas Ends Down, Pressured By Weather, Stocks
NEW YORK, Dec 8 - NYMEX Hub natgas futures ended lower across the board Tuesday in moderate trade, pressured by mostly seasonal weather forecasts and bearish expectations for Wednesday's weekly inventory report, industry sources said.
January slumped 18.8 cents to close at $1.913 per million British thermal units after trading between $1.895 and $2.12. February settled 16.7 cents lower at $1.96. Other months ended down 1.7 to 14.4 cents.
''Everyone realized yesterday was just a short squeeze. Fundamentally, it looks pretty putrid, and there's nothing right now to turn it around,'' said one East Coast trader, adding selling stepped up as people realized there was no chance January would fill the gap.
Despite cooler temperatures this week that helped firm the cash, traders said bloated inventories and mostly seasonal forecasts could keep the complex on the defensive near-term.
Estimates for Wednesday's weekly AGA storage report range from a draw of 17 bcf to a build of 15 bcf. For the same week last year, stocks fell 69 bcf. Overall inventories now stand at 471 bcf, or 18 percent, over year-ago.
WSC expects above-normal East Coast temperatures Tuesday to moderate to closer to normal levels Wednesday through Saturday. Cooler weather is forecast for the Midwest this week, but readings should remain several degrees F above seasonal.
In Texas, the mercury will average four to 10 degrees below normal through Saturday. The Southwest also will remain several degrees below normal for the period.
Technical traders said January's failure today to challenge the overhead gap coupled with a weak close likely signals more downside ahead. They pegged support at the contract low of $1.811, and at prominent spot continuation lows of $1.78 and $1.61, which is the spot low for the year.
January resistance was seen in the remaining $2.12-2.19 gap, with further selling likely at $2.27 and then at $2.35.
In the cash Tuesday, Henry Hub swing quotes on average firmed 35 cents to about $1.80, still well below the December index of $2.14. Midcon pipes jumped about 20 cents to near the $1.90 level, still off more than a dime from December 1 levels. In the West, El Paso Permian was pegged more than 25 cents higher in the mid-$1.90s.
Gas at the Chicago city gate was talked up 20 cents at about $2.00, while New York was 10 cents higher at $2.10.
The NYMEX 12-month Henry Hub strip tumbled 10.1 cents to $2.041. NYMEX said an estimated 72,134 Hub contracts traded today, little changed from Monday's revised tally of 72,520.
Canadian Natural Gas Prices Ease In Alberta, Rise At Exports
NEW YORK, Dec 8 - Transportation constraints at the Alberta/British Columbia border contributed to softer prices in Alberta but firmer prices at the export points, industry sources said.
NOVA said this morning that interruptible transportation service at the border was reduced to zero.
The pipeline company also reported that linepack as of Monday evening was up to 12.842 billion cubic feet (bcf), just shy of the pipeline's target of 12.9 bcf.
As a result, day prices at Alberta's AECO storage hub gradually softened throughout this morning's session, landing near C$2.00 per gigajoule (GJ) by 1000 MST after trading as high as C$2.20.
These prices were down an average of seven cents from Monday's market.
Conversely at the export points, prices turned higher amid more strengthening in the U.S. market.
Trade at Emerson was quoted mostly at US$1.65-1.71 per million British thermal units (mmBtu), up about 20 cents from Monday.
At the Sumas/Huntingdon border point, prices jumped about 27 cents to about US$2.00-2.05 per mmBtu, while Niagara gas was seen trading in the high-US$1.80s to about US$1.90 per mmBtu, up about 37 cents from Monday.
US Spot Natural Gas Prices Rise, Narrowing Gap To Futures
NEW YORK, Dec 8 - U.S. spot natural gas prices continued to recover Tuesday, narrowing the gap between cash and futures, industry sources said.
Cash prices at Henry Hub were quoted widely again at $1.67-1.90 per mmBtu, with most business seen done near $1.80. Prices have risen by more than 70 cents in the last two days.
Conversely, NYMEX's January contract slid to a low of $1.94 in this morning's session, down 16.1 cents from Monday's settlement.
The Midcontinent market continued to trade higher than Gulf values, with deals reported done today mostly around $1.90.
The bulk of business on Northern at Demarcation was seen done in the low-$1.90s, while Chicago city-gate prices were quoted mostly near $2 but finished the session around $1.90.
In west Texas, swing Permian Basin prices were quoted widely at $1.85-2.00, while the southern California border market gained a few cents to about $2.17-2.23.
In the New York area, where the arrival of cold front pushed today's forecasted high into the low-50s, city-gate prices were quoted about 10 cents higher at $2.10.
Cooler-than-normal weather continued to cover the Southwest, Texas and the southern plains, a trend which is expected to persist through week's end. Seasonal highs in the upper-30s to mid-40s were forecast for the Midwest, Weather Services Corp. said.
The six- to 10-day forecast shows below-normal temperatures along the immediate East and Gulf Coasts and stretching into Florida, while above-normal temperatures are expected to cover the northern and central plains and the northwestern coastal area. Seasonal weather is forecast elsewhere. |
