Due to fundamental influences remaining weak, eastern prices continued to fall at nearly all points, generally by large amounts. However, thanks to an infusion of cold and snowy weather across the Pacific Northwest and northern Rockies along with the removal of OFOs by California's two biggest distributors (see Transportation Notes), western markets generally saw a mix of large and small rebounds from Friday's across the board plunges.
Flat to moderate increases were mixed into the eastern softness, with Northern Natural's demarc and Ventura points strongest by virtue of colder air moving into the Upper Plains, part of the pipeline's market area. But the dearth of load elsewhere in the East resulted in declines ranging from about a dime to more than $1.50.
With the East continuing to feel unusually moderate temperatures for this time of year, it was hardly surprising to see prices there continue to yield to an overall lack of either heating or cooling demand. But although southern portions of the West are joining the East in unseasonable warmth, highs Tuesday were expected to range from the 20s in the northern Rockies to the 40s in the Pacific Northwest. Western gains ran as high as about a dollar at Sumas and nearly C$1.20 at Westcoast Station 2.
Noting that the Chicago citygate had one of the East's smallest drops, a marketer said there was not that much demand change from Friday other than the usual bump in industrial load coming out of a weekend, but it meant little to him since his company mostly serves utility and retail load in the Windy City area. He was still getting gas turned back Monday by Chicago-area utilities.
The natural gas screen ignored plunges in Nymex's petroleum complex to go from a negative performance early to an eventual 45.8-cent advance in what was attributed to trader short-covering. That set up a contest between weak fundamentals and a much stronger futures contract for Tuesday's cash market.
The market said he looks for slight increases in cash Tuesday based on the screen run-up, but nothing significant, maybe flat to a nickel higher. He expects Henry Hub-Nymex basis to widen quite a bit, saying cash will be unable to match the screen gains.
A Gulf Coast producer had a different take. Despite the screen strength, "I'm betting on weak weather" to keep prices softening through the rest of the week., he said. Unaware of the short-covering trend, he said he didn't know why gas futures rallied so spectacularly, but added, "Nymex doesn't always have to make sense."
The producer said he's starting to prepare for upcoming maintenance constraints on Florida Gas Transmission. Because its heaviest throughput period of the year is for summer power generation load in Florida, FGT can afford to wait until late fall for such work, he said. That wouldn't be feasible for pipes to northern market areas.
Northwest-domestic numbers were up about a quarter Monday but are likely to suffer a bit starting Tuesday, as shippers will be unable to inject or withdraw from Questar's Clay Basin storage facility for the next three days (see Daily GPI, Oct. 28), potentially depriving some gas of a viable home.
The spell of mostly moderate weather in which November began will continue through at least the first half of the month, according to The National Weather Service. In its six-to-10-day forecast for Sunday through Wednesday of next week, the agency calls for above normal temperatures everywhere east of a line running south along the eastern edge of Washington state through western Utah and Arizona. Only Northern California, southwest Oregon and a coastal sliver from northwest Oregon through Washington are expected to see below normal readings.
The restoration of Gulf of Mexico production from hurricane-related shut-ins continued to slow over the weekend. Minerals Management Service said it counted 4,481.53 MMcf/d in remaining outages Monday, down 87.19 MMcf/d from the previous Friday. This followed recovery advances of 316.36 MMcf/d last Thursday and 158.12 MMcf/d on Friday.
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