The calendar has rolled around again to the “shoulder season.”
That’s the time of year when the weather stops pulling on the U.S. natural gas market. No weeks of frigid cold or sweltering heat. If you squint at a price chart, the peak in winter looks kind of like a head, with the fall and spring as the shoulders on each side.
This is the Northern Hemisphere spring, when daily average temperatures are closer to that Goldilocks zone -- neither too hot nor too cold. The biggest news that shook the gas market loose from a 34-month low was speculation that more power plants will use the fuel as prices drop, offsetting record production.
Gas deliveries to power plants climbed 12 percent from a year ago to 23.3 billion cubic feet a day as of Wednesday, according to LCI Energy Insight in El Paso, Texas.
“There’s no weather,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York.
Well, not the type that moves the markets in a significant way. There is still an El Nino in the Pacific, the threat of tornadoes across the central U.S. and a growing wildfire threat in the West.
Until a few days with temperatures in the 90s Fahrenheit (mid-30s Celsius) come along and send everyone running to their air conditioners, the frigid days of last winter seem like the shards of a vanishing dream.
In New York, for instance, the average daily temperature in Central Park for April 15 is about 53 degrees, according to the National Weather Service. It may seem chilly at first glance, but after the winter that just ended, it is hardly anything to get excited about.
The forecast also calls for temperatures to linger 3 to 5 degrees above normal through the weekend. In other words, it is time to buy some charcoal and have a barbecue in the backyard after you’re finished planting new flowers along the front walk.
There may be cooler temperatures by the middle of next week that could spur a little demand for natural gas, said Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland.
“But all of these numbers are generally small-sided for sure,” Rogers said.
Viswanath said traders got a surprise in April.
“We have just had a pretty dramatic transition into spring,” Viswanath said. “The early call on April was it would be a cold month and that is just not shaping up. Too much supply and too little weather demand.”
Even last week’s Colorado State University Atlantic hurricane forecast failed to provide much excitement. First off, it only called for seven storms, which is less than the long-term average of 12.
Second, the Gulf of Mexico has about 4 percent of U.S. natural gas production and 17 percent of its oil, while a decade ago it had 13 percent and 25 percent, respectively.
Winter freeze-offs have a bigger impact on natural gas production than hurricanes do these days, said Stephen Schork, president of the Schork Group Inc., a consulting group in Villanova, Pennsylvania.
As for the weather that is coming over the horizon, well, that seems to be eliciting an early shrug, which may explain why this is the shoulder season.
The El Nino is bubbling up in the equatorial Pacific and while there is debate over what this means for summer in the U.S., Rogers said he tends to lean toward a cooler July and August.
While that might not be good news for the natural gas bulls, a mild summer might be just the antidote after the winter we had.