Not surprisingly, the cash market fell by mostly large amounts at all points Friday, feeling negative pressure from relatively little appreciable cooling load outside the desert Southwest, another prior-day screen drop, the lack of any new tropical storm activity and the extra loss of industrial demand over a holiday weekend. The storage situation also remained bearish despite Thursday’s report of a 48 Bcf build in the previous week falling a little below expectations.
Declines ranged from a little more than a dime to about 95 cents at the Florida citygate. In general, losses tended to be smallest at Rockies/Pacific Northwest points and largest in eastern markets.
Unless a viable storm threat comes along, prospects for a rally in this holiday-shortened trading week are close to zilch. October futures tacked on a further drop of 17.1 cents Friday, and most of the East is expected to see normal to below normal temperatures this week. Above normal readings are predicted for much of the West, but inland from the coast the heat will affect mostly areas that are relatively lightly populated. Also, the mild weather of last week has led to anticipation of a considerably larger storage injection in Thursday’s report.
The effect of cool Northeast weather and milder warmth in the Southeast was showing up in Transco Station 65 nominations. Analysis of flows at 14 trading hubs by Bentek Energy (https://intelligencepress.com/features/bentek/) showed that scheduled Station 65 volumes Friday were down 259,000 MMBtu/d, or 10%, from the day before, due to falling demand in the pipeline’s two primary market areas.
A high-linepack OFO by SoCalGas helped send border prices more than half a dollar lower.
And while it did not issue a Type 6 OFO Friday, Southern Natural Gas said one was “highly likely” for long imbalances on Sunday and Monday. It joined other eastern pipes trying to discourage shippers from parking unsold gas in system linepack over the long weekend.
Ernesto, whittled down to a tropical depression again after a trip through eastern North Carolina, was expected to keep going through the Mid-Atlantic into Pennsylvania, where it is likely to have disappeared by the time trading resumes Tuesday. It was depressing East Coast gas demand both with its cooling rains and by causing power outages (see story in Power Market Today).
A Midwest utility buyer said his area was getting down to around 50 degrees at night late last week, but added that customers were only turning off their air conditioners and not turning on any furnaces. He bought Northern Natural-demarc supply in the $4.70-90 range for the weekend, which was well below NGI‘s demarc average of $5.41 Thursday.
It seems as if prices may not be totally crashing, the buyer remarked, but they certainly are coming down pretty fast. Of course, the lower prices mean less overall demand, so his company is making less money on distribution throughput, but that was balanced by “not getting nearly as many customer complaints about high gas prices” as before, he said. It seems like about a week into August somebody flipped a switch and suddenly most of the U.S. went from very hot to mild or even cool, he said.
A Calgary-based producer said she didn’t trade Chicago Friday because her company had made all of its citygate sales Thursday for five-day flows. NOVA Inventory Transfer (Aeco-C) prices were a lot more volatile than usual, she said, although she wasn’t aware of why. Sumas demand was weak enough that the producer found it more advantageous to sell at Westcoast Station 2 instead, saying that moving gas from there to Sumas wouldn’t have covered T-South Line transport costs.
The Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/) found 1,416 rigs drilling for gas in the U.S. for the week ending Sept. 1, a drop of 20 rigs from a week earlier. However, the latest tally was up 1% from a month earlier and up 16% from a year ago. Baker Hughes counted 87 rigs seeking gas in the Gulf of Mexico, as opposed to only one targeting oil.
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