For the short trading week of Aug. 31 to Sept. 2, natural gas prices traded high and low with regional double-digit gains and double-digit losses spread across the trading landscape. After the smoke had cleared, though, the NGI Weekly National Spot Gas Average couldn't even match the previous week's modest 4-cent gain to $2.55, as the Weekly Average was unchanged.
The market points showing the greatest gains and losses belonged to Canada with the week's largest advance at Empress, up 45 cents to $C2.94/Gj and the greatest decline realized at Westcoast Station 2 at a $1.58 loss to $C0.55/Gj.
The regional swings within the U.S. were wide. The Northeast dropped the most with a 38-cent decline to $2.04, and the Midcontinent was the week's top gainer posting an advance of 13 cents to $2.70.
Also in the loss column were the Southeast with an 18-cent drop to $2.70, and Appalachia fell 16 cents to $1.34.
California was up 4 cents to $2.87 and the Rockies were just ahead with a move higher of 7 cents to $2.60. East Texas and South Louisiana followed suit with gains of 8 cents and 9 cents to $2.80 and $2.81, respectively.
Both South Texas and the Midwest made gains of 11 cents to $2.81 and $2.83, respectively.
September futures expired Monday at $2.853 up 18.1 cents from the August contract settlement. However, for the five-day period since August 26, October futures fell 12.1 cents to $2.792.
Natural gas bulls were on the defensive from the get-go Thursday morning after the Energy Information Administration (EIA) reported a storage injection for the week ending Aug. 26 that was greater than what traders were expecting. EIA reported a 51 Bcf storage injection in its 10:30 a.m. EDT release, about 10 Bcf greater than what traders and analysts were expecting and outside the range of analysts estimates. October futures reached a low of $2.790 immediately after the figures were released and by 10:45 a.m. September was trading at $2.809 down 7.8 cents from Wednesday's settlement. At settlement October was lower by 9.5 cents to $2.792 and November had shed 9.5 cents as well to $2.908.
As bearish as the number was, traders were relatively unfazed. "You know $2.79 is nothing. I think the market is in good shape," a New York floor trader told NGI. "It's OK. It just gave people a little opportunity to add a little more on."
Others saw it differently. "The initial reaction in price has been quite bearish, and we feel this print opens up a test of $2.76 into the weekend," said Harrison NY-based Bespoke Weather Services following the number's release.
"The 51 Bcf build in US natural gas storage for last week was more than expected and a significant step up from the smaller than expected 11 Bcf refill in the prior week," said Tim Evans of Citi Futures Perspective. "The gain was still less than the 68-Bcf five-year average rate and so does confirm a further tightening of the market on a seasonally adjusted basis, but the data implies a weaker overall balance in the market than had been thought."
Inventories now stand at 3,401 Bcf and are 238 Bcf greater than last year and 334 Bcf more than the five-year average. In the East Region 21 Bcf were injected and the Midwest Region saw inventories increase by 29 Bcf. Stocks in the Mountain Region rose 3 Bcf, and the Pacific Region was unchanged, The South Central Region dropped 2 Bcf.
While injections and draws completely outside the range of expectations are infrequent, they do happen, according to Nathan Harrison, NGI markets analyst. "Since NGI began tracking these data in December 2013, expectations beat/misses have occurred 23 times. The Nymex futures response is generally pretty large on the day, but has ranged from $0.005 to $0.45 on an absolute basis. On average, these events tend to generate a move of about 9.1 cents in the prompt Nymex futures price on the regular session close of the day the news is priced in. The median of these events is a 6.4 cent move."
In Friday trading physical natural gas for the four-day Labor Day holiday weekend fell as temperature outlooks moderated and traders assessed the loss of energy demand from the storm-ravaged Southeast.
The NGI National Spot Gas Average fell 13 cents to $2.44, and greater declines were seen in the Rockies, California and the Northeast. Some points in New England shed close to $1. Natural gas futures trading was lackluster at best. The October contract was unchanged at $2.792, and November shed a penny to $2.898. October crude oil bounced back from a four-day losing streak and rose $1.28 to $44.44/bbl.
New England and the Mid-Atlantic saw stout price drops as temperature forecasts moderated for the extended four-day holiday period. AccuWeather,com forecast that Boston's Friday high of 74 degrees would hold for Saturday, but drop to 67 Monday and reach 72 on Tuesday. The normal high in Boston this time of year is 76.
Gas at the Algonquin Citygate for weekend through Tuesday delivery tumbled 94 cents to $1.83, and deliveries to Iroquois, Waddington changed hands 68 cents lower at $2.09. Gas on Tenn Zone 6 200L dropped 91 cents to $1.81.
New York City's forecasted temperatures didn't lend any support to weekend-through-Tuesday gas prices either. The 80-degree high Friday was seen sliding to 77 Saturday and 75 by Monday. On Tuesday the high was expected to be 84, four degrees above normal.
Gas on Texas Eastern M-3, Delivery fell 12 cents to $1.14, and gas bound for New York City on Transco Zone 6 shed 10 cents to $1.23.
Major market center prices softened for the extended weekend. Gas at the Chicago Citygate was quoted 7 cents lower at $2.77, and deliveries to the Henry Hub lost 6 cents to $2.85. Gas on El Paso Permian changed hands 20 cents lower at $2.50, and gas at the PG&E Citygate fell 14 cents to $3.22.
Futures traders see current prices secure for now. "It wasn't much of a day going into the long weekend," a New York floor trader said. "It would seem that traders are comfortably long at this time. The longer-term longs are comfortable, and they are long from the $2.50 area, but the shorter-term traders, day traders got out and put us back to where we were Thursday. For now the upside is intact."
Other traders are short-term bearish on the market. "While this big build [51 Bcf] doesn't necessarily put 4 Tcf back in play at the beginning of the withdrawal cycle in early November, it does shift focus back to the fact demand for cooling purposes will be declining going forward with the passing of the Labor Day holiday," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Thursday.
"We feel that a portion of [Thursday's] selling was also related to the additional price plunge across the petroleum complex. Furthermore, the tropical storm factor ebbs and flows daily, and it appears that some storm premium was being taken out of the market today. While some of the systems are increasing in magnitude, they also appear to be veering away from the GOM production alleys and toward Florida where some East Coast cooling effects are expected to develop. We are maintaining a bearish trading stance and would suggest holding any short October positions in quest of an ultimate decline to around the $2.60 area."
Offshore oil and gas operators in the Gulf of Mexico (GOM) were re-boarding platforms and rigs and restoring production Friday as the remnants of load-killing Hermine, weakened again to tropical storm strength, moved northeast across North Carolina and toward the Atlantic Ocean, the Bureau of Safety and Environmental Enforcement (BSEE) said (see related story).
BSEE estimated that 192,791 b/d, or 12.04% of the current oil production in the GOM was shut in Friday, down from 15.18% on Thursday (see Daily GPI, Sept. 1), and 229 MMcf/d, or 6.74% of natural gas production, down from 9.03% 24 hours earlier.
Based on data from offshore operator reports submitted through 11:30 a.m. CDT Friday, there were no remaining evacuated production platforms in the GOM, BSEE said. On Thursday, 10 production platforms had remained evacuated. In addition, personnel had returned to all 11 rigs currently operating in the GOM, according to the agency.
At 5:00 p.m. EDT Friday, the center of Tropical Storm Hermine was located over southern South Carolina. Hermine was moving toward the northeast at near 20 mph and was expected to move off the North Carolina coast by Saturday afternoon.
Maximum sustained winds were near 50 mph, with higher gusts. Little change in strength is expected Friday night and early Saturday while the center of Hermine remained over land. Strengthening was forecast after the center moves offshore, and Hermine could be near hurricane intensity again by late Sunday, NHC said.