Recent cash price firmness eroded a bit further Thursday as the number of softer points began to approach equilibrium with those continuing to make slightly firmer performances. However, small gains remained dominant.
A moderate majority of locations were flat to only about a nickel higher. Losses were similarly small in ranging from 2-3 cents to about C10 cents (NOVA Inventory Transfer).
The Energy Information Administration's report of a 103 Bcf storage injection for the week ending Sept. 10 exceeded nearly all analysts' prior expectations and was handily above consensus estimates in the mid to upper 90s Bcf. Nymex traders obviously saw bearishness at first in the volume, especially in comparison with the year-earlier build of 66 Bcf and the five-year average of 77 Bcf. However, although they had been a few cents higher earlier in the morning and sank soon after the report's release, October futures wound up recovering to a daily increase of 6.7 cents (see related story).
Citi Futures Perspective analyst Tim Evans expects fairly large storage additions to continue, projecting builds of 88 Bcf and 93 Bcf for the weeks ending Sept. 17 and Sept. 24, respectively.
Other than Tropical Storm Karl restrengthening in the Bay of Campeche, as expected, after crossing the Yucatan Peninsula Wednesday, there was no change of any substance in the Atlantic tropical scene Thursday. With Karl expected to make landfall sometime Friday in the area of Tampico, Mexico, U.S. Gulf of Mexico production continued to enjoy a quiet period with no storm threats.
Meanwhile, hurricanes Igor and Julia remain on generally northward trackings that will keep them well away from the East Coast, although Igor is expected to pass over Bermuda.
The overall weather outlook also saw little change: hot in the Southwest, warm in the South and decidedly fall-like temperatures almost everywhere else, with some freezing-area lows still showing up in parts of Western Canada.
After reporting a huge Tuesday-Wednesday leap from 723,100 MMBtu to 910,900 MMBtu in Chicago citygate trading on its online platform (see Daily GPI, Sept. 16a), IntercontinentalExchange (ICE) said there was an even sharper reversal to 636,800 MMBtu Thursday. The citygate average essentially was flat, ICE said.
Henry Hub activity also slumped greatly from 1,180,000 MMBtu for Thursday to 809,000 MMBtu Friday, ICE said, but the price there was up about 3 cents.
Bentek Energy's U.S. Natural Gas Hub Flows chart indicated nomination volumes for Thursday approximately evenly divided between increases and decreases at the 23 trading points it covers. Opal saw by far the biggest percentage gain of 32% (up 311,000 MMBtu to 1,278 MMBtu) as Wednesday's Opal Plant allocations caused by supply shortfalls (see Daily GPI, Sept. 16b) were fading.
Albeit on relatively small volumes, Bentek found the two largest percentage drops of 288% (down 10,000 MMBtu to 25,000 MMBtu) at Niagara and 20% (down 25,000 MMBtu to 98,000 MMBtu) at Waha. Tennessee Zone 0 in South Texas came in third at 18% on larger volumes falling 46,000 MMBtu to 204,000 MMBtu, the consulting firm said.
Demandwise there has "not [been] a ton" of run-up, and that won't change much this weekend, a Texas marketer said. He attributed the futures rally to the prompt-month contract "hitting some targets" at which he thinks some traders saw bargains. He doesn't look for futures to go below $4 again anytime soon but acknowledged that a "huge" storage injection might disrupt that projection.
The marketer said there was a fair chance of cash prices in general being softer for the weekend, but then he expects a rebound next Monday. He noted that it's "actually going to be chilly" into 50s highs in parts of New England late this weekend, which he mused might create potential heating load. He thinks the basis spread between the Gulf Coast production area and Northeast citygates has gotten about as tight as it will be for the rest of the year.
A Southwest utility buyer said things are currently quiet for his company, although it continues to have one of the nation's hotter service areas with highs around 100. He admitted having a bit of a problem with El Paso's frequent fluctuations between high-linepack and low-linepack conditions in the last two to three months, but he was able to deal with them. For now the utility is "hoping we'll get a winter season," but prospects appear uncertain at this point, he said.
A Midwest marketer said temperatures were cooler in her area Thursday before rising into the 70s this weekend, but after all, that's still not very warm, she noted. A lot of fall-like conditions are currently dominating the Midwest, she said. She couldn't rule out some heat returning to the Midwest again this year but said for now there's none on the foreseeable horizon.
At this point clients are placing orders almost entirely for storage injections, the marketer said, but no one has any heating load yet.
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