LONDON (Commodity Online): Natural Gas futures registered essentially all of the day's downward price movement right at the open, then hardly varied during the remainder of the trading session.
In the process, the September contract set a new low for the year, settling at $4.09 per MMBtu, down seven cents. Prices for 2012 slipped 2 cents, to $4.59. Our view is that $4 in the cash market represents a soft floor for prices, since at that price level, coal displacement can be sizeable.
Henry Hub cash traded at an average price of $4.26, down 4 cents. New York (Transco-Z6) slipped 8 cents lower, to $4.62, while SoCalBorder fell 4 cents, to $4.33.
But with hot weather a seemingly permanent fixture in the east, there will be little spare gas-fired capacity with which to displace Coal units. Further, the market has a mixed view on coal displacement, meaning that prices can trade below the $4 floor for short periods.
