The cash price rally that began rather timidly at the start of this week continued to gain momentum Wednesday as cooler weather trends manifested themselves in the Midwest and South. Prices rose at all points despite expectations that cold spells going into the weekend would be short-lived.
Gains ranged from 2-3 cents to about 45 cents, with a large majority of them in double digits. The Florida citygate claimed the top increase as Florida Gas Transmission extended an Overage Alert Day into at least Wednesday, and it was the only point sporting a front-digit handle above $4.
After being a little higher for most of their expiration day, November futures finally succumbed to a closeout of $3.292 -- down 6.2 cents from Tuesday (see related story).
Whatever was left of former Tropical Storm Richard had disappeared from the National Hurricane Center (NHC) map Wednesday. NHC was still tracking low-pressure systems in the central and eastern Atlantic, both of which it accorded low (10%) odds of becoming a tropical cycle in the following 48 hours. Later Wednesday it added a third system in the eastern Atlantic to which it accorded slightly higher chances (20%) of development.
Temperatures will be edging a little lower Thursday in the South and Midwest, with forecast highs in the mid 60s in Memphis, TN, and in the upper 40s with an overnight low just above freezing in Chicago as examples. The Northeast was expected to stay fairly mild for at least one more day before a blustery storm arrives from the west.
Columbia Gas (TCO) and Dominion saw similar price hikes of 10-15 cents or so on IntercontentalExchange's online trading platform, but while Dominion volumes stayed stagnant around 535,000 MMBtu, TCO leaped forward by 108,800 MMBtu to 726,600 MMBtu.
A Northeast utility has topped off storage and is "comfy" for winter, said the company's fuel buyer. It has a lot of seasonal term supply under contract, he said, but some of it is based on the daily swing market if the utility wants to change the price or adjust the volume. The company only bought November baseload gas into Tennessee-South Texas, but that a "daily take deal" that can be shifted if needed, he added.
The buyer said his area would be getting colder into the weekend but warming up a bit afterward. He thinks many producers prefer to "choke it back" [reduce flow] instead of completely shutting in wells.
An Upper Midwest marketer reported buying November baseload at plus 16 cents into Consumers Energy and plus 24 cents into MichCon. Temperatures "haven't been that cold yet" in her area, and she suspects that Wednesday's higher cash prices were due to some people being reluctant to draw from storage while current prices are so low.
Credit Suisse analyst Teri Viswanath said she expects a 77 Bcf storage build to be reported for the week ending Oct. 22.
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