Cash averages across most of the country Friday declined on average from a couple of pennies to more than 20 cents as storage supplies remain robust, hot weather in the East and West waned and the tropics continued to offer no threat to Gulf of Mexico energy infrastructure. Points in the Rockies added from 1 to 3 cents.
After going into Friday's trading with little or no directional influence from Thursday's 1.1-cent decline in October natural gas futures, that will not be the case for cash traders coming in after the holiday. On Friday, the prompt-month contract soared 18.8 cents to close at $3.939 on a round of short-covering ahead of the long weekend.
"A healthy round of short-covering is really standard operating procedure ahead of a long holiday weekend to limit risk," said a New York trader. "Add to that the fact that the Atlantic is as busy as it is with storm systems and it makes even more sense."
According to IntercontinentalExchange (ICE) data, cash prices in the Gulf-Texas region and the West Coast declined mostly from a few pennies to just more than a dime, while Midcontinent and Northeast points lost anywhere from a nickel to just north of 20 cents.
CenterPoint East South Pool was one of the largest losers of the day, according to ICE, which reported prices there falling 20 cents to average $3.45. NGI will start offering a CenterPoint East South Pool index on Oct. 1. For a full listing of the new indexes NGI will be listing in October, please see our Price Notice: http://intelligencepress.com/0901notice.pdf.
The Rockies managed to eke out modest gains on the day with the Northwest Pipeline Corp.-Wyoming Pool, Opal and few other points picking up a few pennies. Temperatures on Friday were in the mid- to high-70s.
After experiencing gains as large as 27 cents (PG&E Citygate) on Thursday for Friday delivery as the West Coast endured a blast of heat, prices at most western points came off on Friday for delivery through Tuesday as temperatures moderated a tad.
"The heat backed off a bit on Friday, but traders also had to trade a four-day package ahead of the holiday, so I think that produced some of the weakness," said a West Coast utility trader. "Thursday's run-up is still confusing people a bit. Yes, it was hot, but there is also some speculation that the cash hike was driven by some maintenance and shut-ins that might occur. Some of the producers and marketers I think got a little scared and that is why we saw things gap up unnaturally Thursday. It will be really interesting to see what happens after the holiday. I think there might be a bit more of a retraction, but we'll have to wait and see."
Transco Zone 6 New York and non-New York averages continued to plummet Friday -- by 19 cents and 17 cents, respectively, according to ICE -- as moderating temperatures created the concern of an oversupply of gas. Transcontinental Gas Pipe Line Co. on Thursday issued an imbalance OFO for gas day Saturday (Sept. 4) "due to pipeline integrity activities, forecasts of moderate temperatures throughout much of its market area and current operating conditions."
The OFO, which will continue until further notice, places a minimum $50/Dth penalty directed to shippers and wellhead operators to ensure that their daily "Due To" imbalance (i.e. long to the pipeline) be no greater than 10%, or 1,000 Dth.
As Hurricane Earl left North Carolina with its sights set on Cape Cod and Nova Scotia, the radar remained jam-packed with weather disturbances. However, as of Friday afternoon, none of the three other identified systems was projected to threaten the Gulf of Mexico.
Tropical Storm Fiona was on a northerly course in the Atlantic far off the U.S. East Coast, while two other systems were further out. One, which constitutes the remains of Tropical Storm Gaston, was located between the Cape Verde Islands and the Lesser Antilles, while the other system was off Africa's West Coast.
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