Moderate to cool conditions were still dominating the overall forecasts, and as a couple of sources had pointed out, Thursday's 24.8-cent screen plunge "practically guaranteed" lower prices Friday. They were correct as quotes fell across the board from about C5 cents to 30 cents or so; all drops were in double digits except for those at Empress and NOVA Inventory Transfer in Western Canada.
The typical weekend decline of industrial load had its usual negative influence, even if only a small one, on Friday's cash market.
Otto continued to develop Friday, reaching hurricane status but staying on a northeastward course into the central Atlantic and away from North America. After raising its estimated odds on a low-pressure area in the southwestern Caribbean Sea strengthening into a tropical cyclone from 10% Thursday to 20% by Friday morning, the National Hurricane Center returned them to 10% that afternoon.
November futures will have minor support for Monday's cash market after rallying slightly by 3.4 cents Friday (see related story).
Much of the South is experiencing the return of peak temperatures in the mid to upper 80s, while the Midwest also is seeing a warming trend, although its highs are about degrees less than in the South. Largely counterbalancing those fairly minuscule increases in cooling demand are static to falling thermometer readings in the Northeast, Rockies/Pacific Northwest and Canada.
After drops of 15 and five in the two preceding weeks, Baker Hughes found a reversal during the week ending Oct. 8 in the temporary decline of drilling rigs searching for gas in the United States. The tally rebounded by nine to 971, the company said.
Florida Gas Transmission was the latest pipeline to weigh in with a caution against positive imbalances for market-area customers, saying with mild weather being forecast for the next several days and total linepack exceeding target levels, it may need to issue an Underage Alert Day on an upcoming gas day if linepack continues to rise.
With SoCalGas adding its own high-linepack OFO to an ongoing one by PG&E (see Transportation Notes), IntercontinentalExchange (ICE) said volumes traded for the weekend on its platform still rose modestly to 419,000 MMBtu from 416,600 MMBtu Thursday at the SoCal citygate but -- by a much more substantive amount -- to 895,500 MMBtu from 795,600 MMBtu at the PG&E citygate. Prices fell about 20 cents at both California delivery points, ICE said.
Rockies and Western Canada suppliers regained an outlet for excess gas -- especially useful in light of the high-linepack OFOs in California -- after a testing shutdown of the Jackson Prairie storage facility on Northwest's system ended Friday.
The U.S. Natural Gas Hub Flows chart by Bentek Energy showed Friday volumes dropping at a slight majority of the 23 trading points it covers. Nominations at several locations were essentially flat, while only MichCon (up 103,000 MMBtu to 1,256 MMBtu, or 9%) was the only percentage increase of more than 1-4%. The Tennessee Zone 0 drop of 37% (down 153,000 MMBtu to 259,000 MMBtu) was the largest percentage downturn for the day, Bentek said, although larger volumetric reductions were experienced at the PG&E citygate (365,000 MMBtu, or 12%); Texas Eastern M-3 (340,000 MMBtu, or 16%; and the Chicago citygate (174,000 MMBtu, or 8%).
A producer in the Rockies, where Denver highs were returning to just above 70 Friday and Saturday after a brief sojourn up to 84 Thursday, said it was "the worst kind of gas [price] weather possible." Obviously area air conditioning load is nonexistent again, he said, but it's still not getting cold enough overnight to get many people running their furnaces. Abundant storage will abet anticipated weak weather-based demand in depressing prices through the rest of October unless it gets about as cold as about a year ago.
He considered it a shame that the gas rig count had begun rising again. That indicates some producers are foolish, he said, since they don't seem to recognize that increasing rig activity will just keep spot prices below $4 longer they have to be (some Rockies averages were dipping slightly below $3 after Friday's big declines, while only three Northeast points were still managing to reach the $4 area).
However, the Rockies producer did find it "rather encouraging" that the CIG-Henry Hub basis spread was staying around 37 cents, because in the past there have sometimes been Rockies basis blowouts while Questar's Clay Basin storage facility is out of action, as it is currently through this coming Thursday. The producer said he guessed it shows that the additions of Rockies takeaway capacity in recent years are helping to smooth out extreme market fluctuations.
A western trader noted that forecasts of high in the low 80s for inland California obviously fell short of inspiring the use of gas-fired peaking generation units, and the dual OFOs by SoCalGas and PG&E showed that the Golden State was far from being starved for additional gas.
Tradition Energy analyst Addison A. Armstrong noted that Thursday's report of an 85 Bcf storage injection for the week ending Oct. 1 not only raised the total inventory to 3.499 Tcf but also marked the fourth consecutive build that was above the comparable year-ago volume and the five-year average.
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