The reality of seasonal autumn weather -- with both heating and cooling load on the low side -- began to exact a more bearish influence on the market Thursday, with most points falling by 2-3 cents to about 15 cents. Most numbers were close to flat, with other points ranging from unchanged to nearly a dime higher.
The Energy Information Administration's report of a 91 Bcf storage injection for the week ending Oct. 8 was closely in tune with analyst expectations on either side of 90 Bcf. However, after a small push upward soon after the report, November futures finished the day with a drop of 3.9 cents (see related story).
Former Hurricane Paula remained essentially a nonevent for Gulf of Mexico producers Thursday as it fell to tropical storm status while starting to cross the western end of Cuba, where it was expected to continue weakening. The Atlantic Basin was bereft of other tropical activity, the National Hurricane Center said.
Paula's primary effect on the gas market would be to quench any potential cooling load in southern Florida, which had been the warmest area of the U.S. outside the desert Southwest.
Otherwise mildness remains the overall weather condition. Few areas will rise above the low to mid 80s Friday, and highs in the 60s and 70s will be prevalent.
PG&E's high-inventory OFO (see Transportation Notes) lowered prices at the citygate by about 15 cents and depressed trading volumes on the IntercontinentalExchange (ICE) online platform from 734,200 MMBtu Wednesday to 701,100 MMBtu Thursday.
ICE also found Katy Hub prices shrinking by a little less than a nickel as trading activity there plunged from 723,200 MMBtu to 465,700 MMBtu Thursday.
Several sources acknowledged a quiet gas market in the midst of typical shoulder-month weather. Current mild conditions equate to slow purchases, said a Midwest utility buyer. A Texas utility buyer echoed that sentiment, saying she had almost no purchases to make while highs in the 70s were prevalent.
A Northeast utility buyer also said things were pretty quiet in gas market in a "pre-winter" load context. He said his company's customers were starting to benefit from lower gas prices due to increased Marcellus Shale supplies and the greater availability of Rockies gas via the Rockies Express terminal at Clarington, OH.
The U.S. Natural Gas Hub Flows chart by Bentek Energy showed nominated volumes for Thursday falling at a majority of the 23 trading points it monitors. Ten of those points were flat to 5% higher, Bentek said, with the Chicago citygate leading the way with a rise of 102,000 MMBtu to 2,128,000 MMBtu (5%). Most points were down a bit, with Tennessee Zone 0 seeing the largest percentage decrease of 42,000 MMBtu to 241,000 MMBtu (15%), Bentek said.
A Midwest utility buyer reinforced the perception of lower agricultural drying load for gas this year, saying he was "hearing the crops are coming in with very low moisture level, and as a result of that not much gas will be needed for drying. Good news for farmers, not so good for gas sellers."
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