Cash prices again relied on the continuing spread of cold weather and prior-day screen support to keep the overall market moving upward Friday. However, unlike the solid advances recorded in the first two days of December aftermarket trading, several flat to lower points -- primarily in the West -- surfaced in quotes for weekend flows.
Gains ranged from a nickel to nearly 75 cents, while losses ran as high as about 35 cents.
Apparently the industrial load loss associated with a weekend was able to induce moderate softening or flat numbers at a few points, one source suggested. But based on a fresh screen spike of 90.4 cents Friday and predictions of chilly to frigid weather occupying virtually all of Canada and the U.S. except the desert Southwest early this week, it's almost a given that all points should be united again in climbing higher Monday, he said.
A western trader offered a rationale for both the PG&E citygate and Southern California border falling a little more than a dime. In checking their bulletin boards, he found that the big California utilities appeared to be pulling more than before out of storage. Also, after some rain in the weekend forecast, the Golden State should be warming up slightly, he said.
Although it did not issue an OFO, PG&E projected that linepack would be bumping up against its maximum target levels over the weekend. Other pipeline systems in the West were in the opposite situation, though. Kern River continued to report low linepack in all four segments Friday, and Westcoast changed its imbalance tolerance range to discourage any drafting (see Transportation Notes).
Part of the South has been able to escape the shivery weather that has laid siege to the northern two-thirds of the U.S. recently, but a slow-moving cold front over the weekend should bring the entire region into the cold fold by Monday, and the South can expect substantive heating load to hang around through the end of the week, The Weather Channel said.
A Midcontinent marketer sounded exasperated as he professed not to know what's going on with "this screen madness." He said there should be an investigation of how much hedge fund money is influencing what he considers an unwarranted futures run-up last week. "I have heard it's due to cold weather, but it's December and it's supposed to be cold!" he said. "The tail is wagging the dog" because speculation appears to be driving an overblown futures market.
The marketer said he was buying gas into Panhandle Eastern at $7.50-60 for the long Thanksgiving weekend, "and now look how much higher it is." (NGI found Panhandle quotes averaging in the upper $10.60s Friday.) Cash quotes started near their lows and were rising through the end of trading, which often points to the next trading day's price direction, he noted. A lot of sellers were active early, but they started disappearing as trading went on, having already placed their supplies, he said. "I read the market in November pretty well," but it's not as easily readable now.
The recovery of Gulf of Mexico production from hurricane-related shut-ins continued at a relative snail's pace. Based on reports from 54 companies, Minerals Management Service (MMS) said there was 2,943.30 MMcf/d in remaining outages Friday, down 21 MMcf/d from the day before. It continued to count 132 evacuated platforms, but said the number of evacuated mobile drilling rigs finally dropped to zero Friday from one on Thursday. Since Aug. 26 the cumulative total of deferred production caused by Hurricanes Katrina and Rita has reached 501.222 Bcf, or 13.732% of the Gulf's approximate yearly output of 3.65 Tcf, MMS said.
Epsilon officially became the 14th hurricane of the 2005 Atlantic season but remained a nonevent for the natural gas industry. It was moving toward the northeast Friday afternoon about 1,165 miles west of the Azores, the National Hurricane Center said.
Citigroup's Kyle Cooper said his initial estimation of the upcoming storage report calls for a withdrawal in the upper 50s Bcf.7
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