The brief midweek firming effect on gas prices from colder weather began to fade a bit Thursday as modest warming trends were in effect in such areas as the South, Northeast and Midwest. They weren't substantial enough to generate much in the way of cooling load, but they caused the market to be mixed on small price changes both up and down from flat.
The usual weekend decline of industrial load will also be in effect for Friday's market, and the Atlantic tropical scene remained devoid of any near-term threats to Gulf of Mexico production.
A modest majority of locations were flat to about a dime higher Thursday; nearly all gains were in single digits. Most of the losses ranging from 2-3 cents to about 15 cents were concentrated in the Northeast, California and Western Canada.
Sources agreed that Friday's cash market is almost guaranteed to be uniformly softer. November futures took a dive of 24.8 cents (see related story) following an Energy Information Administration report of an 85 Bcf storage addition for the week ending Oct. 1, which handily exceeded consensus analyst expectations in the mid to upper 70s Bcf and was well above the five-year average build of 67 Bcf.
Otto got upgraded from subtropical to tropical storm but remained on a northeastward course that would keep it distant from the East Coast. Meanwhile, the National Hurricane Center gave only 10% odds of a surface low-pressure trough about midway between Honduras and Jamaica in the west-central Caribbean Sea becoming a tropical cyclone in the succeeding 48 hours.
Peak temperatures are starting to inch back up as high as the mid 80s in some parts of the South, and they're also seeing minor increases in the Northeast and Midwest as well. There's nothing even close to a heat wave in the forecast, though, as the overall outlook will remain modestly warm to cool.
In a signal that Upper Midwest cold is easing, Northern Natural Gas is issuing a System Underrun Limitation effective Saturday because of above-normal forecasts for its market area (see Transportation Notes). Although Tennessee's OFO Action Alert (see Daily GPI, Oct. 6) is the only other specific action against excess linepack, Transco was among several other pipes cautioning shippers against creating positive imbalances.
Also, Southern said the probability of its issuing a Type 6 OFO Saturday and Sunday was "highly likely" for long imbalances but unlikely for short imbalances.
IntercontinentalExchange (ICE) found Rockies Express trading volumes on its online platform at Clarington-Tennessee -- a new pricing point added by NGI at the beginning of October -- rising from 150,900 MMBtu Wednesday to 177,600 MMBtu Thursday while the price fell about 3 cents. Meanwhile, non-Tennessee deliveries at Clarington were down a little more than 2 cents as volumes dropped from 116,200 MMBtu to 81,3000 MMBtu, ICE said.
Even though PG&E extended a high-inventory OFO through at least Friday, ICE reported PG&E citygate quotes rising about a penny, although ICE-traded volumes there shrank from 859,400 MMBtu Wednesday to 795,600 MMBtu Thursday.
Yes, the storage report-based bearishness in futures will drag cash numbers lower Friday, a Texas-based marketer said. Also, the fact that several pipelines are warning shippers not to create positive imbalances is another indicator of a soft Friday market, he added.
It's getting a little warmer in many areas, so the moderate amount of heating load that had supported prices earlier in the week is starting to fade, he said. That's among the reasons for the market being pretty quiet for now, he said.
A Midwest utility buyer said his company was seeing a "little bit" of agricultural drying load coming on, but the heavy part of that annual load boost hadn't arrived yet. And such demand may be a little subpar this year, he said, because due to little rain in the region over the last few weeks, "crops are coming in drier than usual."
Utility throughput is fairly minimal currently, the buyer continued; there is "absolutely" no air conditioning load left, and only a small amount of heating demand is replacing it so far. He was expecting a problem that his utility is experiencing with nominations involving NGPL's compressor station constraints at Gage, NE, will be ending late next week.
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