Seasonal fall temperatures are due to reign in most areas as the new month begins Monday, and that was bearish news for the cash market. Even without the "weekend factor" of light industrial load in effect, prices fell at a large majority of points Friday.
Losses ranging from a couple of pennies to about 15 cents were in a slight majority. But there were nearly as many flat to almost 20 cents higher points, nearly all in the Northeast where a stormy cold front had just set up residence and in the West.
The "weekend factor" of lighter industrial load did not come into play; because Nov. 1 falls on a Monday, Thursday's trading covered Friday through Sunday while Friday's deals were for Monday-only.
December futures made it two-for-two so far in their nascent prompt-month reign in providing prior-trading day support for the cash market. Despite weakness in most of Nymex's energy complex, the contract rose another 14.8 cents (see related story).
Tropical Storm Shary had formed overnight Thursday but was headed northeastward away from the North American East Coast Friday. The National Hurricane Center (NHC) rated a low-pressure system about 1,300 miles west-northwest of the northernmost Cape Verde Island as having only a 10% chance of becoming a tropical cyclone in the following 48 hours (the estimate was lowered to near-zero by mid-afternoon).
Of potentially greater concern to Gulf of Mexico (GOM) producers was a strong tropical wave about 360 miles east-southeast of the southern Windward Islands that NHC had uprated late Thursday to near-100% odds of cyclone development. If continued, its west-northwestward tracking as of Friday would carry it through the Caribbean Sea over the next few days, with the possibility of breaking out into the GOM afterward.
Tennessee and Southern became the most recent pipes to act against the establishment of long shipper imbalances (see Transportation Notes) while PG&E extended a high-inventory that had already been set for Friday.
The extension of a high-inventory OFO by PG&E did nothing to faze numbers at the PG&E citygate and Malin, which increased about a dime and a nickel, respectively. Trading volumes on IntercontinentalExchange (ICE) slid by nearly 50,000 MMBtu from Thursday to Friday at the citygate, but jumped by nearly 100,000 MMBtu at Malin.
Prices at Texas Eastern M-3 may have slipped by about a dime, but ICE found a huge surge of M-3 activity on its online trading platform, where volumes soared 463,900 MMBtu in 84 deals Thursday to 696,200 MMBtu in 111 deals Friday. Even more dramatic a change was witnessed at the Chicago citygate, where prices were up a little less than a nickel, ICE said, but trading quantities more than doubled from 444,500 MMBtu to 1,008,400 MMBtu.
A Midwest utility buyer said his buyer experienced its first frost of the season Thursday night. He was pretty sure that at least a few local residents had furnaces running, because he had turned on the one at his house for a little while last week.
The grain harvest period has gone about as expected several weeks ago, he said: very little crop drying load for gas because of near-drought conditions during much of the summer and early fall. The harvest is virtually finished by now, leaving gas distributors with much less drying revenue than they usually realize.
The buyer wondered if the agriculture firms saving so much money on drying services means that Americans can expect cheaper groceries such as bread and corn-based products down the road.
The utility already has about 70% of its winter supply under contract, and thus he expects only minimal participation in the bidweek and daily markets in coming months. The buyer went on a trip in the week preceding bidweek, so he did most November purchases based on index before leaving. In tying up a few loose ends after getting back last week, he said it seemed that baseload numbers had eased a bit from mid-month.
A Midwest-based end-user who buys gas for facilities in several states and provinces also did all his deals early. Currently the spread between relatively cheap gas and good prices for its manufactured product is very advantageous for his company, he said. Most of the Midwest is cool now, but he doesn't perceive any major heating load in the region during the first half of November.
ICE noted very little getting done as bidweek trading winded up Thursday. Trends were mixed, with Chicago citygates retreating a couple of pennies from their $3.50 average peak on Wednesday, while El Paso's two San Juan Basin pools continued to move modestly higher.
The Baker Hughes Rotary Rig Count recorded an increase of two to 967 in the number of rigs searching for natural gas in the U.S. during the week ending Oct. 29.
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