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Small Gains Predominant; Weakness Expected

A producer was accurate for the most part in predicting a modest rally in the cash market Thursday as a result of the huge recovery from negative territory by May futures the day before (see Daily GPI, April 3). Most points did see gains, with a majority of them in single digits. However, quite a few quotes at scattered locations were flat to down as much as about 20 cents.

The overall increases ranged from 2-3 cents to about a quarter.

The Energy Information Administration's report of a 29 Bcf storage withdrawal during the week ending March 28 fell short of consensus expectations in the mid 30s Bcf. Nymex traders sent May futures both up and down afterward until late morning when a steady decline set in (see related story). The contract finally ended the day with a whopping 41.5-cent loss.

Although the eastern end of the South would begin Friday with chilly weather, it would warm up quickly later in the day, The Weather Channel (TWC) said. The region's western section was still generating cooling load Thursday, but temperatures will be dropping to more comfortable levels going into the weekend, it added.

It was hard to detect any definitive weather trends in the Northeast and Midwest market areas as temperature forecasts were kind of spotty. Some sections of each region will be warming slightly Friday while others will be getting a little colder again. Heavy wet snow in the Dakotas area will be shifting eastward, according to TWC.

The lower reaches of the West are expected to remain cool to fairly warm, while the Rockies continue to experience seesaw-like conditions. The Denver area high sank from the mid 50s Wednesday to around 40 Thursday, but it is forecast to return to the mid 50s Friday.

An Overage Alert Day declared by Florida Gas Transmission went into its third day Thursday, and while that resulted in small increases at the Florida citygate and in Florida Gas Zones 1 and 2, Florida Gas Zone 3 fell about a dime.

Maritimes & Northeast U.S. (M&N) said Thursday afternoon it had learned that the Sable Offshore Energy Inc. (SOEI) production facility "has encountered a decrease in production" that day. It advised shippers sourcing supply from SOEI to "contact their supplier to get any information that may be desired concerning the cause, extent and duration of the production loss, as well as the potential of this event causing supply restrictions for current and/or future gas days." Dracut, the Massachusetts terminus of M&N, was up nearly a dime.

An Overrun Entitlement for receiving parties north of Kemmerer Compressor Station being implemented Friday by Northwest (see Transportation Notes) put a damper on flat Northwest-domestic quotes, but it enhanced demand for gas at Sumas, which rose about 15 cents. Westcoast Station 2 numbers, up almost C15 cents, also got a boost from the entitlement.

A Gulf Coast producer said spot prices are almost certain to fall Friday as a result of Thursday's screen plunge. The usual weekend loss of industrial load will be another negative factor for the physical market, he said. And as if to put icing on the bearish cake, he noted that prices "were falling all the way" Thursday morning, which is yet another indicator that Friday's prices will continue in the same direction.

"We're finally getting some nice warmer weather in the [local] forecast," a Midwest marketer said. There's very little residual snow left in her city, she added. She thought the intermediate-term trend toward milder weather in northern markets had a great deal to do with pushing futures much lower.

The marketer said her company hasn't been buying any spot gas so far in April but may pick up a little for the weekend if the price is indeed lower as expected Friday.

Musing about forecasters making the wrong calls for warmer-than-normal weather in February and March, she wondered if they will do any better in predicting the summer, which is also expected to have mostly above-normal temperatures in its early months.

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