Cash traders appeared to have no concern about Tropical Storm Richard possibly surviving an overland passage and emerging into the southern Gulf of Mexico this week. What mattered more to them was a persistent lack of substantive weather-based demand (either heating or cooling); storage inventories poised to hit another all-time high level; and the previous day's screen plunge. The physical market recorded large double-digit declines across the board Friday.
Naturally, the industrial load decline that accompanies a weekend market played a minor role in the softness.
In losses ranging from about 15 cents to the 55-cent area, only a few points fell by less than 20 cents. Although major drops were spread liberally throughout the market, the biggest ones tended to be concentrated in the Midcontinent and Rockies.
November futures again provided a negative example for Monday's cash market, but it wasn't as bearish as it might have been. Amid general strength in Nymex's energy futures complex, the prompt-month gas contract clawed its way back from a $3.29 low to a daily close of $3.332 that was only 3.6 cents in the red (see related story).
As the National Hurricane Center (NHC) had expected, Richard gradually turned more to the south and southwest Thursday. By early Friday afternoon the storm was on a westward course projected to carry it over Mexico's Yucatan Peninsula and much of Belize, possibly grazing northern sections of Belize and Guatemala. If it doesn't fizzle out over land, that could have Richard entering the southern GOM around Wednesday morning this week, The Weather Channel said Friday.
NHC rated chances of low-pressure systems that were about 100 miles south of the southernmost Cape Verde Islands and about 1,000 miles east of the Lesser Antilles at 30% and 10%, respectively, for developing into tropical cyclones over the weekend.
Only the sparsely populated western half of Canada and a few U.S. locations just south of the border were due to experience freezing overnight lows going into the weekend. Predicted highs approaching 90 in some parts of Texas constituted essentially the last bastion of seriously warm temperatures; otherwise few locations in the South were exceeding either side of 80 Saturday. And although some chilly lows in the 30s were due in upper New England and sections of the Rockies, deliciously crisp fall conditions seemed to be the perception almost everywhere else.
The moderately cool Northeast forecasts exacted a toll in the Gulf Coast market, where Transco Station 85 (Zone 4) took one of the day's biggest hits in terms of both price and volumes, according to IntercontinentalExchange (ICE). Not only did the Station 85 price average plummet nearly 40 cents, ICE said, but trading activity there on its online platform fell by nearly half from 708,7000 MMBtu Thursday to 360,900 MMBtu Friday.
On the other hand, the Chicago citygate dropped by almost as much, but ICE found trading activity there jumping from 658,000 MMBtu to 764,400 MMBtu.
Southern indicated that it was "highly likely" to issue a Type 6 OFO for long imbalances Sunday, but such an action on Saturday and Monday was "too close to call" and "unlikely," respectively. However, Tennessee partially lifted an OFO Action Alert against positive imbalances (see Transportation Notes), eliminating it in the two farthest downstream zones but leaving it in place for six other zones.
And Northwest sounded a mildly bullish note in cautioning customers that cooler temperatures were forecast for Monday and Tuesday in all of its market areas. "Please secure enough supply to meet the increased load of the cooler temperatures," the pipeline said.
It was still a market in the doldrums for a Lower Midwest utility buyer; with the service area in the midst of cool but comfortable temperatures, gas throughput is fairly low for this time of year, she said. Temperatures should see some cooling this week, "but only to average." There may be "a few" furnaces running locally she continued, but with overnight lows close to 60 that would be for only short periods to dispel early morning chill.
The utility is still micromanaging its end-of-season storage, making late injections slowly so it doesn't fill accounts before the Oct. 31 deadline, the buyer said. With the weather as moderate as it is, the company wants to leave a little injection space flexibility that can be used as an outlet for gas not burned by customers. It certainly doesn't want to have to sell that gas at a loss into such a currently weak market, she added.
She didn't know whether it was true elsewhere, but the buyer said generally above-normal temperatures are predicted for this winter in the Lower Midwest.
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