With negative pressures continuing to bear down on the market, cash prices finally succumbed Friday by posting sizeable losses at all points. Cooling load would be growing even scarcer over the weekend, the screen had dropped more than a quarter the day before, bearish storage signals were surfacing again, and the industrial load decline over a weekend came into play.
Declines ranged from about C20 cents in Western Canada to nearly a dollar. The Rockies was by far the weakest geographic market area in hosting all the points that fell by 90 cents or more. In addition, all Rockies points except Cheyenne Hub averaged less than $4.
Northwest-domestic had traded at a 56-cent deficit to Sumas on Thursday, but thanks to the domestic product’s drop of nearly a dollar Friday while Sumas fell only a little more than 15 cents, the gap more than doubled to $1.30-plus Friday. One source suggested that the huge spread could be related to domestic gas finding little load in California (SoCalGas extended a high-linepack OFO through at least Saturday) and essentially no access to the pipeline’s Jackson Prairie storage facility.
Jackson Prairie is on the verge of filling working gas capacity. As of last Wednesday inventory had reached 22,026,220 dekatherms, Northwest reported Friday; total capacity is 22,532,520 dekatherms. Northwest requires storage customers to have their Jackson Prairie accounts full by Sept. 30 each year.
A market that was already having difficulty finding significant cooling load found even less for the weekend.
A cold front will have temperatures topping out in only the 60s and low 70s in the Northeast and the Mid-Atlantic by Monday, The Weather Channel said. There might even be some heating load developing from northern New York through New England as the thermometer plunges to overnight lows in the 30s early this week. Another cold front was due to bring similar results to the Midwest and northern Plains over the weekend. And although it will take a little longer, the Northeast cold front will reach into parts of the South this week and create highly unseasonable chills. The West in general will remain relatively warm compared to the rest of the nation for a while longer, but also will see falling temperatures from a cold front after midweek, according to TWC.
Reduced weekend load and cool weather turned the market totally bearish, a Northeast marketer said. Finally the fundamentals are starting to matter again, he said. The market has settled into the new shoulder month and is getting much quieter, he said, adding, “There’s not really anything to hang your hat on.” The marketer allowed for the possibility of a new rally this week, but said he looks mostly for “orderly” softening (i.e., no great plunges).
The marketing representative for some independent Gulf Coast producers thought the market was apparently coming to its senses after early-week rallies that didn’t seem to be justified. One reason is that hurricane season has been a total nonevent; “the forecasters really blew it,” she said. However, all it takes is one strong hurricane in the Gulf to make prices shoot up again, she noted.
A $5.675 screen is down from previously, the trader observed, but still seems awfully strong in comparison with a few years ago. The futures winter strip looks ridiculous, she said, asking, “Whoever heard of $10 [screen gas] in March ?” The March 2006 contract went off the board at $7.112.
Tropical Storm Florence virtually disappeared from the market’s radar screen Friday. It was expected to menace Bermuda, possibly as a hurricane, by the end of the weekend, and could bring rain and gusty winds to the Maritimes provinces of Canada toward the middle of the week. But it would be entering colder Atlantic waters by then and presumably weakening again.
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