Gas Petrospective – September 30, 2010

Natural gas prices were up 1.1 cents per million Btu yesterday in a quiet session ahead of this week’s underground storage report. There was reported bargain-hunting and Dow Jones reported buying in sympathy with stronger prices in the oil complex. That has been more of a rare occurrence lately. Traders were getting used to November as the expiring contract.

There is nothing severe brewing on the horizon on the tropical storm front right now, and the biggest weather “feature” will be heavy, extensive and intensive rainfall across a huge swath of the Eastern United States. Flooding will be a common experience from New England to Florida, in those places that traditionally suffer from heavy rainfall amounts. If this had come earlier, it might have been seen as a cooling factor that could have diminished demand for electricity for cooling purposes. But, coming now, it will have less of an impact. There will still be areas without power, though, as a result of the inclement activity.

Dow Jones noted in its daily roundup that traders were buying natural gas futures lightly in sympathy with the buying seen in oil markets. We do occasionally see this, although we think it would probably be a mistake to expect to see it continue on a continuing basis. We would not be looking for stronger oil prices, if they continue, to be a regular factor influencing natural gas prices. As it is, this market has had a very hard time keeping sight of any one or more factors on a continuing basis. It is harder during shoulder months.

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