Market Still Bullish on Futures, Meager Storage Build
Cash prices continued to advance Wednesday with the West once again leading the procession, and there was no hint of a setback in sight as the screen rose above $5 for October and reported storage injections remained below par. Crude oil futures also were very strong, with the October contract settling a dime short of $35/bbl.
Much like the day before, eastern markets saw upticks that were fairly consistently on either side of a dime. Meanwhile, except for Waha/Permian Basin, western increases tended to range from about 30 cents to a little more than 50 cents. Transportation constraints, along with strong cooling load combined with nuclear plant outages, accounted for much of the West's strength, sources said.
AGA said 42 Bcf was injected last week, a figure that was below expectations and signified further growth in the refill deficit.
A marketer in the cool Midwest perceived weather fundamentals as mostly bearish, "but prices keep going up anyway." His end-user customers are praying that their problems with high energy prices will be resolved, the marketer said, "but it doesn't seem to be doing any good."
Waha prices maintained the small premium to Katy that developed Tuesday. Waha was rising steadily Wednesday, except for a brief stall in the middle of trading, to finish the day around $5, one trader said. Intrastate Texas air conditioning demand was a bit off due a slight cooling trend but still strong, but westward Waha flows into El Paso were rising as the pipeline was able to expand South Mainline capacity a bit more (see Transportation Notes). "Maybe we should break out the sweaters here in Houston," the marketer joked. "For the first time in over a week we're not exceeding 100 degrees."
California, which was a rare market in beginning September below index levels, had all three major points trading above index Wednesday. Prices there got a boost from Transwestern maintenance that began Wednesday and caused significant cuts in San Juan Lateral and West of Thoreau capacity. The maintenance is scheduled to be completed Sunday.
A tropical wave had moved to less than 550 miles east of the Leeward Islands as of Wednesday afternoon and was given a good chance of developing into a tropical depression soon.
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