We've barely gotten into the cooling season, just wait until people see their electricity bills for July and August. As we said introducing May 9's "$10 Handle in Sight For Natural Gas Futures, ‘Barring Massive Supply Gains’"
This is the first mention of $10 natty that we've seen, and coming from NGI demands attention. As in the old trader's line: "Pay attention or pay the offer."
From Natural Gas Intelligence, June 6:
In one of the most explosive sessions in recent weeks – and that’s saying a lot – natural gas futures rocketed higher Monday as production struggles to gain momentum and heat is starting to intensify ahead of what’s expected to be a hot summer.
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At A Glance:
- Pipeline work sinks production
- Triple-digit temperatures seen in Texas
- Power burns boosting cash prices
The July Nymex gas futures contract jumped 79.9 cents to $9.322/MMBtu. August futures climbed 79.6 cents to $9.306.
Spot gas prices also strengthened as temperatures across Texas are poised to touch record levels this week. NGI’s Spot Gas National Avg. shot up 67.0 cents to $8.565.
With forecasts calling for heat to become more widespread later this month, traders took notice of the potential for highs in Texas to surpass the century mark for the next seven days in some cities. The electric grid operator for most of Texas – the Electric Reliability Council of Texas – said the sweltering conditions could drive loads to a near-record level above 74,000 MW on Monday and Tuesday. At the same time, wind generation was expected to falter, dropping by more than 100 gigawatt hours/day.
“Strong loads, particularly when paired with falling wind output, often require increasingly inefficient gas-fired generation to keep the lights on, creating increased chances for elevated spot gas market demand and upside power burn surprises later this week,” said EBW Analytics Group senior analyst Eli Rubin.
Meanwhile, production has been a source of frustration for the gas market. After nearing late-2021 highs early last week, output softened later in the period and failed to recover over the weekend. Estimates showed production at around 95 Bcf on Monday, 2 Bcf shy of the highs largely viewed as needed to loosen up supply/demand balances....
....MUCH MORE
Futures $9.44, up another 0.12.
As the man said:
—Presidential candidate, Senator Barack Obama,
