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Price Weakness Grows in Trading for Weekend

Friday's October aftermarket-ending trading was much like that of the day before: large price drops across the board. The difference was that declines got much larger at nearly all points. Moderating weather trends, a bearish storage report, prior-day screen weakness and the usual weekend drop in industrial load were cited as factors in the softness.

Points fell anywhere from C50 cents (intra-Alberta) to as much as about $1.75 (Houston Ship Channel). Quite a few more points saw dollar-plus plunges Friday than on Thursday.

Once again the softening was fairly well spread across all geographic market areas. But Texas points were especially weak, with a solid majority down more than a dollar, as cool temperatures caused intrastate air conditioning load to nearly disappear without any new heating load to compensate.

The Northeast and Midwest were slated to enter the weekend under some still-frosty conditions but to warm up a bit by Sunday. Cool but mostly moderate weather would continue to prevail in the South and West.

Western markets were pressured by a new high-inventory OFO from PG&E, which had canceled a previous one Friday (see Transportation Notes). The previous OFO had failed to prevent the PG&E citygate from realizing a gain of about half a dollar during the overall market spikes Wednesday, but this time the citygate tumbled nearly 90 cents.

Some indication of returning power generation load in southern Florida came from Gulfstream canceling an Action Alert that had been issued due to high linepack. Florida Power & Light said Friday it had restored power to 1.5 million customers, almost half of the 3.2 million on its system who had lost electric service during the passage of Hurricane Wilma.

The pace of restoring shut-in offshore production picked up a bit, but not by much. After reporting a reduction of less than 4 MMcf/d Thursday, Minerals Management Service (MMS) said its tally of offline supplies shrank to 5,504.49 MMcf/d Friday. That's 54.75 MMcf/d less than on Thursday.

Midwestern weather load for the weekend was dropping enough that a Texas marketer said he had been buying for retail loads in the Chicago area earlier in the week "and now we're selling those loads." He didn't expect any significant price rally this week unless there is a major turn in the weather, and none is in the forecast, he said.

Chicago citygate basis for November was around minus 55 cents just prior to bidweek, the marketer added, but it got as weak as minus a dollar after Tuesday's screen spike before rebounding a little. He didn't see any bidweek trading being left for Monday except minor tweaks. "Most people don't want to leave their positions hanging over a weekend" with only one day left to clean them up, he said.

The nation's area of coldest weather will be shrinking in the latter half of this week. In its six-to-10-day forecast for the Nov. 2-6 period, the National Weather Service predicts below normal temperatures only in the Northeast and Mid-Atlantic states. Most of the western two-thirds of the U.S. will continue to experience above normal readings, the agency said.

Tropical Storm Beta remained a nonevent for U.S. offshore producers, being projected to go ashore near the Nicaragua-Honduras border sometime late Saturday or early Sunday.

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