Gas Petrospective – August 23, 2010

Natural gas prices gave up another 5.4 cents per million Btu, bringing the week’s losses to 21.1 cents per million bpd. We did not get a sudden burst of short-covering before the weekend, which is unusual at this time of year, because we are in the heart of tropical storm and hurricane season. As it turned out, a tropical storm did form over the weekend. It tells us something about the lack of respect this market has been held in recently, especially by the big funds selling this market so aggressively. The latest temperature forecasts have been calling for moderate readings, which makes sense – given the 20 hours of pounding rain we have been through here in the Northeast. This has arrived courtesy of a lingering low that will keep temperatures cooler than usual all week long. The rain, which has been falling steadily, is expected to persist into this morning. Temperatures will be cool in a number of states, and the Dakotas and Carolinas are expected to have sudden declines in temperatures today. In the northern Plains states, readings could fall by as many as 25-30 degrees after an especially hot weekend. These cooling trends across large tracts of the continental United States should cut dramatically into demand for electricity to run air-conditioners. That should help the bears this week.

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