I just looked back at an email I sent out on 7/31…here were the prices for fall through winter contracts at the origination points listed:
Prices rose nearly every day during the month of August and what is amazing to me is it wasn’t a quarter cent here or there, but rather the markets averaged an increase of over ONE CENT PER DAY for the 22 trading day in August! Here’s what I could have sold gas for end of day on August 30th (sans the pipeline tariffs)
That’s a .2425 cent increase in Conway, which is $.0110 cents per day. There was a $.2475 increase in Hattiesburg and Mt Belvieu (TET). We’re looking at an overall increase in prices of around 25 percent in just one month.
So now what?
I’m spending more and more time looking for bearish factors, because the bulls are easy to spot and have been there for months. Inventories are not good pursuant to prices softening, geopolitical tensions are still present, more and more people are feeling like we are on the verge of a strong winter and that includes for the Southeast, as Alabama has had one of the more moderate summers on record. Last night, it was 15 degrees in parts of Alaska, a record.
For bears, the prospects for strong grain drying in the Midwest withered some in the heat of August and the first week of September looks pretty rough, too. An early frost may come in and cause some problems there and we have another three or four weeks to go in most years related to crop maturation and dry down. This was not a normal year as the crops were planted late in most areas due to the spring temps.
In the trading world, we are being told people are still short…our company has remained long throughout the entire spring and summer but most cannot say the same. There is a great deal of pent up demand in the marketplace and there is a lot of buying that still needs to be done. We’ll see support (buyers stepping in) if and when we see dips…unless something fundamentally bearish slams this market upside the head. Quite frankly, I just don’t know what that would be over the next 30 to 60 days.
To start this week & month, we’re calling things over a cent higher than we were to end last week. The cruel summer marches on…