Gas Petrospective – August 10, 2010
Natural gas prices were down another 15.8 cents per million Btu yesterday. The biggest factor in yesterday’s decline came from temperature forecasts which suggest a cooler period coming. The National Weather Service is now predicting cooler than normal readings for large parts of the nation east of the Rocky Mountains starting on August 14th. Texas will not be cooler, but the Southeast and most of the northern tier will be.
It may just be a continuation of the early phenomenon we have seen since March, with the weather roughly a month to six weeks ahead of itself in a number of locations since then. We often do get a period of cooler readings in mid-August, and it will be interesting to see if this is just a brief interlude in a hotter period or if everything is just happening early. It will make a huge difference, because the hotter weather since early March ended a cooler-than-normal period that had started in early November, 2008.
We had been under the impression that we were back in a warmer-than-normal phase, and that we could expect warmer readings in general. Any sustained moderation in temperatures would argue for the earlier-than-normal trend, which would not necessarily mean warmer weather moving forward from here.
Of course, having colder weather arrive earlier might also have its benefits in this market. It will be interesting and instructive to see how this pattern develops.
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