Gas Petrospective – August 18, 2010

Natural gas prices were up 3.9 cents yesterday as funds covered shorts on tropical fears. There was light bargain-hunting and end-user buying and scattered short-covering from other sources, while other funds were selling. The market had its hackles raised by a tropical disturbance “in the Atlantic Basin,” according to Dow Jones News (DJN). Meteorologists have been talking about the likelihood of more tropical storms than usual this season, but so far it has been remarkably quiet. Traders know, though, that the quiet can be shattered quickly by the development of just a few depressions into full-blown tropical storms or hurricanes.

At this stage, it is just a gleam in the ocean’s eye, and it would need to strengthen and then set itself upon a course towards the US Gulf before it could threaten US production or gathering facilities.

Right now, there is abundant supply availability in storage and from production. And we are nearing the end of the hottest part of summer, with cooler, more moderate temperatures forecast for the immediate future and with the arrival of autumn.

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