Even with bearish weather forecasts, the market has been showing some “price stubbornness,” possibly as hedgers buy gas before winter demand arrives, Aaron Calder, senior market analyst at Gelber & Associates in Houston, said in a note to clients today.
This week’s inventory report will reflect heating demand from last week and how sensitive power plants are to rising gas prices, he said.
Above-average gas use at electricity generators has helped buoy demand during a seasonal lull. Power plants will consume an average of 21.22 billion cubic feet a day of gas from October through December, 13 percent higher than a year earlier, the Energy Department said in its monthly Short-Term Energy Outlook on Sept. 11.
The department predicted that coal-to-gas switching at power plants may slow and start to reverse as gas prices increase in the fourth quarter and in 2013.
Gas futures may see support at $3.255 per million Btu and see temporary resistance at $3.546, Mike Fitzpatrick, editor of the Energy OverView newsletter in New York, wrote today.
Volume was 433,957 contracts as of 2:42 p.m. in electronic trading, exceeding the 333,913 contracts traded during yesterday’s Columbus Day federal holiday. The three-month average is 381,000. Open interest was 1.18 million contracts. The three-month average is 1.11 million.
The exchange has a one-business-day delay in reporting full volume and open interest data.