Gas Petrospective – August 19, 2010
Natural gas prices dropped 2.8 cents yesterday. Investors continued to sell natural gas contracts, and producers and end-users stood back, filled with trepidation as the summer starts to wind down. Traders realize that we have possibly three more weeks that are likely to generate temperature forecasts hot enough to scare shorts. After that, the weather prognostications will begin to take on a decidedly more moderate tone. At the same, though, production is not showing any sign of slowing down. It is this fact that remains the guiding light, fundamentally, as prices decline.
Of course, we are in the heart of tropical storm and hurricane season right now. That will be true for the next few weeks. The peak is traditionally seen right around September 10th, and then the odds of severe storms will start to decline.
We do need to note, though, that it has been a productive summer cooling season. If the economy had been just been slightly stronger, industrial baseload demand might have made a difference. Because the economy has been weak, this demand has been missing.
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