Gas Petrospective – August 25, 2010

Natural gas prices dropped another 2.7 cents per million Btu yesterday, falling to a new three-month low. Extremely mild temperatures in the Northeast and Midwest were putting selling pressure on the market, and the likelihood that Daniele will avoid the US Gulf also brought selling to bear on prices.

There is another tropical depression behind Daniele – it can be seen on the map to the left – and it has not yet organized into anything more. Still, it is the right time of year for it, and this kind of conveyor belt of tropical depressions is what meteorologists had in mind when they predicted the large number of named storms for this summer. The fact that we are still at the letter “D” tells us that this prediction has not exactly gone to plan, but tropical events can develop suddenly and quickly and it is possible that we are looking at the start of it all, now.

Temperatures remain on the moderate side right now, although predictions are that they will warm again before August ends. The fact that we are at the end of August seems to be weighing on the minds of traders right now. We are already starting to look ahead to the approaching shoulder months and the diminished demand that we get once we move into autumn from summer. For all intents and purposes, the summer has accomplished the lion’s share of what it will ending up doing this year.

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