After maintaining a facade of firmness for most of the week in the face of generally weak fundamental influences, the cash market fell at all but one point Friday, finally succumbing to the reality of little weather-based load, an ongoing lack of any tropical storm threats to offshore production, abundant storage inventories and a prior-day futures decline.
The usual dip of industrial load during a weekend was an additional, albeit minor, deterrent to price firmness.
Nearly all drops were in double digits ranging from a couple of pennies to about 55 cents. A large quantity of the biggest drops were concentrated in the Northeast. An October Nor'easter was due to keep things chilly and wet in the region during the weekend, with snow possible in some elevations above 2,000 feet, according to The Weather Channel.
A minuscule 2-cent gain by Westcoast Station 2 was the sole exception to the dominant softness.
A few touches of highs in the low to mid 80s in parts of the South, Midcontinent and inland California, along with the Phoenix area in the desert Southwest still reaching the 90s, would constitute the weekend's few remaining reminders of summer-like conditions. Otherwise, except for some near-freezing locations north of the Canadian border, fairly enjoyable weather for outdoor recreation was on tap for most folks.
November futures will again be unable to provide any encouragement to bullish cash traders Monday after sliding another 12.2 cents Friday (see related story).
Hurricane Paula regressed through the stages of tropical storm and tropical depression Thursday and Friday and was weakening further as it departed the north-central coast of Cuba early Friday afternoon after trekking along the elongated western end of the island nation. The National Weather Service said it had issued its final advisory on Paula. There was no other Atlantic tropical activity of any significance.
PG&E kept a high-inventory OFO in place for a second straight day while SoCalGas added one of its own for Saturday (see Transportation Notes). The IntercontinentalExchange (ICE) trading platform found little change in SoCal citygate volumes, rising from 423,000 MMBtu Thursday to 429,300 MMBtu Friday while the average price was down about a nickel. PG&E citygate numbers fell nearly a dime while ICE trading declined from 701,100 MMBtu to 669,400 MMBtu.
In Chicago -- where a modest warming trend was under way but Saturday's temperatures would still top out only around 80 -- the market saw a major jump of more than 100,000 MMBtu in ICE trading activity, going from 630,000 MMBtu in Friday flows to 734,100 MMBtu for the weekend. ICE said the average citygate price fell nearly 15 cents.
Storage is entering the home stretch of the traditional injection season, and while analysts don't expect ending inventories to match or exceed last year's record-setting level, the volumes are likely to come close. Topping off accounts over the next two is one of the rare bullish factors the market has going for it, one source suggested.
However, a Texas marketer said he did not see that situation. "Producers are nervous," he said, adding that his company is not finding any that still have storage capacity left to use as an outlet for their excess supplies. About the only thing that will snap the market out of its current doldrums and weakness is some honest to goodness winter weather that will take some gas out of storage and create new injection space, he said. And for now, there doesn't appear to be anything on the weather horizon that appears capable of refreshing market activity.
After going up by nine in the previous week, the Baker Hughes Rotary Rig Count of drilling rigs searching for gas in the United States returned to a gradual downturn during the week ending Oct. 15, dropping by five to 966. One gas rig was added in the Gulf of Mexico while six were deactivated onshore, Baker Hughes said. Its latest tally is down 2% from a month ago but 34% higher than the year-earlier level.
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