Gas Petrospective – July 29, 2010
Natural gas prices rallied 9.9 cents yesterday, for the first three days-in-a-row on the upside in quite a while. Each succeeding day has been building on the previous day’s gain, with improvements having registered three cents, six cents and then nine cents over the last three days. Yesterday’s gains were “propelled by forecasts of scorching temperatures across the eastern US,” according to Dow Jones. August also expired as the front month in this market yesterday afternoon.
Yesterday’s strength seems to have been primarily a function of very hot forecasts for the eastern half of the nation through August 12th – following an interlude during which a number of forecasts had been expecting moderating temperatures. In fact, those forecasts may have been for the period we are currently enjoying, with readings in southern New England and the greater metropolitan New York area at their most seasonally benign levels in weeks. In other words, temperatures have been extremely pleasant recently.
That is apparently going to pass, and DJN quoted meteorologists calling for departures of “5-6 degrees above normal” for the Southeast, with readings also warming in the Mid-Atlantic and Northeast.
Yesterday’s strength also seems to have been partially the result of expectations for this morning’s EIA underground storage report. It is expected to show a build of 34 bcf, according to DJN, with a range of expectations falling between 22 bcf and 51 bcf. The five-year average of similar Friday reports is a build of 49.4 bcf, including the 2006 draw of 7 bcf. Last year, there was a build of 70 bcf on the same date and 76 bcf on the corresponding Friday. Using dates, the five-year average comes in at a build of 50 bcf.
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