Next-day physical natural gas was strong at California and western points, but that strength was not enough to offset broader weakness at Gulf, Midwest and eastern locations.
The NGI National Spot Gas Average fell 3 cents to $2.24, but eastern points on average dropped close to a dime. Stout next-day power and elevated temperature forecasts were enough to boost California quotes, and higher loads were expected as well.
The Energy Information (EIA) reported a 95 Bcf increase in inventories, slightly less than expectations, and prices rose. At the close, November futures had added 2.4 cents to $2.498 and December was up by 3.6 cents to $2.712. November crude oil added $1.62 to $49.43/bbl.
In an otherwise soft next-day pricing environment Rockies and California prices stood out as temperatures were forecast about 15 degrees above average. AccuWeather.com predicted that Thursday's high of 92 in Los Angeles would jump to 96 Friday before settling in at 94 on Saturday, 14 degrees above normal. Normally, mild San Diego was forecast to see its 81 high on Thursday reach 88 Friday and 87 Saturday, also 14 degrees above its seasonal norm.
Next-day gas at Malin rose 2 cents to $2.39, and deliveries to the PG&E Citygate were down a penny to $2.95. Gas at the SoCal Citygate was quoted at $2.77, up 7 cents, and packages at SoCal Border Avg. points changed hands at $2.51, up 4 cents. Gas on El Paso S. Mainline/N. Baja was seen flat at $2.55.
Rockies points were also firm. Gas at Opal was seen a penny higher at $2.33, and Kern Delivery rose 3 cents to $2.54. Deliveries on Northwest Pipeline WY added 4 cents to $2.27, and CIG was quoted a nickel higher at $2.25.
Next-day power was also strong at western locations. Intercontinental Exchange reported Friday peak power at NP-15 at $41.19/MWh, up $1.44, and peak power at SP-15 gained $3.47 to $40.85/MWh.
Points exporting power to California also rose. On-peak power at Palo Verde was quoted $3.22 higher at $28.56, and at Four Corners next-day power came in at $27.00, up $2.37.
The California Independent System Operator forecast peak load Thursday of 35,242 MW would jump to 38,673 MW Friday.
Other market hubs weakened. Gas at the Algonquin Citygate fell 40 cents to $2.37, and deliveries to New York City on Transco Zone 6 dropped 13 cents to $2.32. Gas at the Chicago Citygate shed 2 cents to $2.44, and parcels at the Henry Hub fell 2 cents to $2.44.
The 10:30 a.m. EDT release of storage data by the EIA gave traders an idea just how much of a surplus will be available to start the winter heating season. Currently, inventories stand at 3,633 Bcf, and all indications are that with four weeks left in the traditional injection season, a record 4 Tcf is in sight. Given the prospects of an El Nino winter, market bulls are no doubt hoping all that has been factored into the market and prices are ready to advance.
For the week ending Oct. 2, estimates were swirling around a 98 Bcf build. ICAP Energy calculated a 97 Bcf injection, and Bentek Energy was looking for a 100 Bcf increase, according to its flow model. A Reuters survey of 26 traders and analysts showed an average 98 Bcf with a range of 87 to 103 Bcf. Last year, 106 Bcf was injected and the five-year average stands at 92 Bcf.
Analyst Andrea Paltrinieri of Natgasweather.com said, "U.S. Lower 48 production is flat [Wednesday] at 71.5 Bcf and power burns are averaging around 24 Bcf." Paltrinieri is estimating a build on the low end of the scale at 94 Bcf, somewhat below market consensus. "I see greater impact on [Thursday's] number due to nuke outages and switching from coal, with more tightening compared to other weeks. I think that any number below 96 Bcf will be bullish, while any number above 100 bearish, and the trading range 96-100 neutral."
The EIA reported a 95 Bcf injection in its 10:30 a.m. EDT release, and that caught a few bears napping. November futures rose to a high of $2.530 after the number was released, and by 10:45 a.m. November was trading at $2.515, up 4.1 cents from Wednesday's settlement.
"We were trading at about $2.49 before the number came out, and once that number comes it's like a flash. If you are not looking up, you don't even see it," a New York floor trader told NGI. "The main consensus was 95 Bcf to 98 Bcf, but I think if you had seen around a 102 number this would have come off. If this market settles over $2.50 I would be surprised. For next week I am hearing numbers of like 96 Bcf."
Inventories now stand at 3,633 Bcf and are 433 Bcf greater than last year and 155 Bcf more than the five-year average. In the East Region 57 Bcf was injected, and the West Region saw inventories increase by 8 Bcf. Stocks in the Producing Region rose by 30 Bcf.
Getting to 4 Tcf might be a little more challenging as pipelines are reporting curtailments and diminished production. Genscape, a Louisville, KY-based data provider for commodity and energy markets, said, "El Paso Natural Gas will conduct maintenance at its Keystone Station in West Texas from Oct. 13 to 16, which could cut flows by nearly 350 MMcf/d. From the 13th to 15th, capacity through Keystone Station will be reduced to 163 MMcf/d from its normal 769 MMcf/d level."
In addition, "Wyoming Interstate Co. is performing mechanical maintenance on their Creston Compressor Station in southern Wyoming, which will cut nearly 150 MMcf/d of production through the end of next week."
WSI Corp. in its Friday morning six- to 10-day outlook said the "period forecast is a little cooler than yesterday's forecast over the eastern two-thirds of the nation."