Rising prices grew even more prominent in the market Wednesday as enough regions are starting to feel enough early-autumn chill to prompt noticeable heating load. It isn't much yet, as overnight lows in the 40s and 50s remain the most common temperature depths, but abetted by a prior-day gain of 1.6 cents by November futures it was sufficient to drive most points higher by generally small amounts.
A large majority of locations were flat to about a dime higher, although only one point exceeded a single-digit increase. The Rockies were home to most of the declines ranging from 2-3 cents to about a dime.
After minor futures backing from Tuesday, the cash market can count on greater support Thursday after Nymex's November contract tacked on a gain of 12.2 cents Wednesday (see related story).
Subtropical Depression 17 formed and then progressed to Subtropical Storm Otto Wednesday afternoon, but as expected it was veering to a northeastward tracking that would keep it out in the central Atlantic well away from the East Coast. A system of thunderstorms farther out in the Atlantic had disappeared from the National Hurricane Center's Atlantic monitoring map Wednesday.
Tennessee had already announced an OFO Action Alert against positive imbalances starting Thursday, and on Wednesday three Spectra Energy pipes -- Texas Eastern, Algonquin and Maritimes & Northeast -- also said they were taking actions effective Friday through Monday to avoid excess linepack due to low weather demand in their market areas.
Panhandle Eastern was a Midcontinent pipe that asked for storage injection restraint by customers due to high inventories at storage facilities and mild weather.
A PG&E high-inventory OFO only pulled PG&E citygate prices about 3 cents lower, according to IntercontinentalExchange (ICE), while volumes traded at that point on its online platform fell only modestly from 904,100 MMBtu Tuesday to 859,400 MMBtu Wednesday. Malin saw even less effect from the OFO, with ICE prices falling less than a penny and volumes shrinking from 543,100 MMBtu to 517,300 MMbtu.
With even Phoenix not expected to get above the mid to upper 80s Thursday, air conditioning load in the U.S. has become awfully scarce in recent days. Although some Southern locations will still be reaching the low to mid 80s, overnight lows in the mid 50s are negating much of that potential cooling demand. Meanwhile, there are definitely some furnaces getting turned on in northern and some western market areas as temperatures signal an early start of near-winter conditions.
A Northeast utility buyer said his company has seen some heating load coming on in the last few days, but daytime highs in the mid 60s later this week should back off some of that. He said the utility is already full on storage for practical purposes, but is leaving "a little hole" for flexibility in case an unexpected warm day or two later this month requires it to have an outlet for unneeded baseload supply.
Because of being ahead on its storage refill program, the utility has been reducing daily spot purchases recently, the buyer said. It's "a comfortable position to be in," he said He reported seeing recent forecast of a cold start this winter but warmer towards the end of the season.
He said buying baseload gas from Marcellus Shale production for October was cheaper than Gulf Coast gas because it was so much closer to his citygate, but prices have been more "iffy" in the aftermarket. He thinks the Marcellus suppliers are trying to find their "comfort level" on how much they can charge and still remain competitive with Gulf Coast gas.
A Midwest utility buyer said her company is also seeing more heating load recently; the increase is not big, "but we noticed it." Rain has been scarce in the area lately, she said, so agricultural drying load should be a little lower than normal, but that didn't matter much to her utility since it serves a nearly all-residential load.
The buyer said she hopes the coming winter is not as "brutal" as the last one. The utility had less than half of the predicted heating degree days during September, but a normal number of cooling degree days, she said.
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