Moderately cool remained the weather watchwords for most of the U.S. and Canada, yet even with a second preceding day of futures weakness cash prices continued to stave off any substantive declines Thursday.
Flat quotes were very common in Thursday's trading, especially in the Northeast and Gulf Coast. Increases ranged from 2-3 cents to about a dime, while minority losses were nearly microscopic in being capped around 2-3 cents.
The Energy Information Administration reported a 58 Bcf storage addition for the week ending Sept. 3. Though nominally bullish in terms of modestly higher year-ago and five-year average comparisons, Nymex traders took something of a dim view of the report in sending the prompt-month October futures contract 4.6 cents lower (see related story).
Most of the warming trends were concentrated from the South Atlantic coast through Oklahoma and Texas, while outside the desert Southwest mild to cool conditions are still the norm in most of the market. The Oklahoma heat, with Tulsa and Oklahoma City predicted to hit the low to mid 90s Friday, helped the Midcontinent join the West in recording most of Thursday's minuscule gains.
Igor had formed as a weak tropical storm late Wednesday afternoon south of the southernmost Cape Verde Islands, the National Hurricane Center (NHC) said. Igor was drifting northwestward around 10 mph Thursday but was expected to turn more to the west-northwest with a moderate increase in forward speed during the following couple of days.
NHC gave 40% odds of development to a low-pressure area approaching the Windward Islands. Neither system posed any potential near-term threat to Gulf of Mexico production.
PG&E's ending a high-inventory OFO (see Transportation Notes) resulted in the PG&E citygate falling less than 2 cents Thursday after dropping 8 cents Wednesday while the OFO was still affecting the market, IntercontinentalExchange (ICE) said. Citygate volumes traded on the ICE platform also rebounded strongly from 579,300 MMBtu Wednesday to 679,400 MMBtu Thursday.
Somewhat reflecting the cool forecasts for the Northeast, with few if any locations due to exceed the mid 70s Friday, ICE found volumes in Transco Zone 6-New York declining from 130,000 MMBtu to 95,700 MMBtu over the same two days.
Reports by Southern indicate that the heat waves through much of August have significantly slowed the formerly rapid storage refill pace of such areas as the Southeast. Out of total working system capacity of 60.0 Bcf, Southern said that as of Thursday (Sept. 2) inventories at its two storage fields stood at 48.0, or 80% full. As of July 29 it had already reached the 44 Bcf level, or 73% (see Daily GPI, Aug. 4). Comparable historical volumes were 58.8 Bcf (98%) on Sept. 3, 2009 and 47.7% Bcf (79%) on Sept. 4, 2008, Southern said.
Crisp fall weather certainly has arrived in the western Upper Midwest service area of Northern Natural Gas. Reporting a normal system weighted temperature of 64 degrees at this time of year, the pipe's bulletin board said averages were projected to stay in that vicinity into the weekend at 63 Thursday, 65 Friday and returning to 63 Saturday.
A Texas marketer said the Nymex softness following the storage report had fairly little impact on Thursday's cash market because of its trading for Friday had already been completed by then. He doesn't expect much change in production-area numbers Friday, but said market-area citygates might be a little softer both because of the weekend factor and the Northeast and Midwest staying pretty cool. The Tennessee OFO Action Alert (see Transportation Notes) is another sign that Northeast deliveries probably will decline, he said.
However, the marketer reported that gas-fired power plants are starting to be fired back up again in the South as closer-to-normal high temperatures return. He said he went to buy some Texas Eastern M-1 gas around mid-morning, and the usual supplier there said he had already sold everything early. The marketer said he wasn't sure, but thinks the supplier indicated that a power generator had been the eager early buyer.
A marketer in the Midwest laughed when asked if he would be willing to trade local conditions for Texas weather. No way, he said, but try him again in another month or so when early snow could be possible in his region while such locations as Houston generally enjoy their most pleasant temperatures of the year. The marketer said he thought the cash market was holding up largely because there is "still demand to get storage full." Storage accounts are still a little short in the Northeast relative to the last five years, and "they're still looking" for injection gas in several of the major Midwest fields. He expects prices to "hang in there" again for the most part Friday. But East Coast basis likely will tighten relative to Henry Hub, he said, with the Hub staying essentially flat and East number maybe a bit softer.
The softening market is starting to take a toll on throughput at certain key pricing points. Whereas the U.S. Natural Gas Hub Flows chart by Bentek Energy had reported increasing nominations for Wednesday at nearly two-thirds of the 23 points it covers (see Daily GPI, Sept. 9), volumes were falling Thursday at 11 of those points, Bentek said (although the 1% drop by ANR in Oklahoma was fairly negligible). Thursday nominations were down 42% (16,000 MMBtu) at Niagara, 12% (300,000 MMBtu) at Texas Eastern M-3 and 11% (163,000 MMBtu) at Transco Zone 6. Bentek found Waha to have the largest continuing increase of 23% (44,000 MMBtu).
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