Gas Petrospective – August 24, 2010

Natural gas prices dropped another 5.1 cents per million Btu yesterday, despite the prediction that Tropical Storm Daniele will be upgraded to a hurricane before the week is over. We knew that starting the week. Nonetheless, the very presence of a hurricane is sometimes enough to get some traders anxious enough to cover shorts. That is, if they were already short, which – as it turns out – not too many of that type of traders were, it would seem.

One look at the map below tells us that Daniele is unlikely to burst into the US Gulf and rampage among rigs or refineries. For a number of traders, most notably those selling yesterday, the existence of Daniele precludes the formation over the same water of a different storm, which could conceivably become a threat to the roughly 11% of American natural gas output located in the US Gulf.

Temperatures, as evidenced by the map above, are also extraordinarily mild across broad swaths of the nation right now. Aside from hot spots in Arizona, Texas and Florida – three states that typically define hot weather in the United States – readings are remarkably moderate as we finish this report this early morning. Northern states are especially cool today, and it is downright cold in Idaho and across the northern Rockies. The heavy consumption states east of the mountain range are unseasonably cool.

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