The cash market continued this week's strong performance for a third day Wednesday, with gains across the board that were mostly in double digits. The official start of winter is still more than a month away, but few could help thinking of it as chilly to cold temperatures dominated forecasts in most areas.
CenterPoint South barely made it into positive territory with an increase of a couple of pennies, while otherwise gains ranged from about a nickel to 35 cents or so (a thinly traded Iroquois Zone 1 was something of an anomaly in being up half a dollar). The Northeast had all of the upticks around 20 cents or more.
Wednesday's cash market had slightly negative guidance from the 2.7-cent screen drop a day earlier, but Thursday's trading can count on plenty of support after the December contract rebounded by 21.2 cents Wednesday; an analyst noted that the market is getting a continued lift from both six- to 10-day and 11- to 15-day forecasts having turned colder (see related story). The intermediate-term colder trends are largely aimed at much of the eastern half of the U.S.
The National Hurricane Center was giving an all-clear signal Wednesday on Atlantic tropical activity after what had designated as tropical wave 94L dissipated overnight. Following a fairly quiet 2010 Atlantic season in which there was a plethora of named storms but none that presented any significant threat to Gulf of Mexico production, the season's end is now less than two weeks away.
Other than southern Florida, with a mid-80s high predicted for Miami Thursday, there's not much warmth left anymore. Even such normally mild areas as the rest of Florida, South Texas, the desert Southwest and Southern California are not expected to get above the 70s, and chilly -- sometimes downright frigid -- conditions will continue to rule in most of the U.S. and Canada.
Despite fairly strong price upticks across the board, IntercontinentalExchange (ICE) found relatively small changes from Tuesday in Northeast/Appalachia volumes on its online trading system Wednesday. However, ICE activity gains tended to be significantly larger in the Gulf Coast/Southeast region, where forecasts of Thursday's temperatures were often near parity with their more northerly counterparts. For instance, the Shreveport, LA predicted high-low of 59 and 37 (by Madison, WI-based Weather Central) bracketed the range of 56 and 40 expected for New York City. Little Rock, AR (56-35) and Memphis, TN (54-33) were both expected to be close matches for Boston's forecast of 54 and 36, Weather Central said.
Thus, while Texas Eastern M-3 deals actually retreated from 577,900 MMBtu Tuesday to 551,000 MMBtu Wednesday even though its price average rose about 20 cents, according to ICE, Columbia Gulf-onshore (up nearly 15 cents) more than doubled from 115,000 MMBtu to 242,300 MMBtu and Henry Hub (up a little more than a dime) saw an increase from 599,900 MMBtu to 726,700 MMBtu.
Northwest is asking customers to draft its system "slightly" through Saturday because inventories at the Jackson Prairie storage field on its system are close to full. However, in something of a turnabout with colder temperatures starting Sunday, "our service territory customers will need to buy sufficient supply to meet the demand for their markets with these colder temperatures."
A Midcontinent producer said he couldn't understand while prices were up pretty strongly for the third day this week "because there is such an abundance of supply available," and he didn't think it was cold enough yet to cause any strain on that abundance. However, he added that he suspected the market might continue its usual pattern of the past month or so of being mostly strong during the first half of a week and then tending to slide in the two or three days going into the weekend.
A Midwest marketer agreed that even with many areas getting down to the 30s and 40s at night, even in the South, having so much gas in storage seemed like it should keep prices from going so high. Until severe cold comes along, her company didn't have much to do but "hope for prices to come down again.
It might not need them now, she added, but MichCon will keep storage injection restrictions in place through the end of November because once the utility begins a month with the restrictions in place, it must keep them in effect for the full month. She suspected that MichCon has been seeing more withdrawals lately than injection nominations.
Some traders think last week's weather might have been chilly enough to induce the season's first withdrawal, albeit a small one. But an injection of 4 Bcf is in the cards for the week ending Nov. 12, according to Strategic Energy & Economic Research's Ron Denhardt. Stephen Smith of Stephen Smith Energy Associates said he looks for a 1 Bcf build, which he lowered from an original estimate of 5 Bcf. Citi's Tim Evans projects a significantly larger addition of 16 Bcf during the week ending Nov. 12, to be followed by unchanged and withdrawals of 19 Bcf and 117 Bcf for the weeks ending Nov. 19, Nov. 26 and Dec. 3.
Most changes from Tuesday in Wednesday's nominated volumes at 23 trading points were flat to 5% or less either up or down, with small gains modestly leading the minor losses, according to Bentek Energy's U.S. Natural Gas Hub Flows chart. But declines dominated the movements larger than 5%. For instance, Tennessee Zone 0 (down 22%), NGPL-TexOk (down 15%), Northern Natural-demarc (down 13%) and Malin (down 9%) were arrayed against Northern Natural-Ventura (up 10%) and Sumas (up 7%), Bentek said. Niagara's volume spike of 73% -- rising 19,000 MMBtu to 45,000 MMBtu -- was a special case because of the relatively small volumes tending to magnify any percentage change, either up or down.
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