With some notable exceptions in the Western Canada/Pacific Northwest area, most points fell Friday because of generally milder weather trends in some regions, the previous day's 2.3-cent drop by December futures and the usual drop of industrial demand associated with a weekend.
A majority of points fell from a little less than a nickel to about 45 cents. But there was still some lingering price strength at several locations that ranged from flat to as much as 75 cents higher. The biggest gains were in the Pacific Northwest, and to a lesser extent in Western Canada and Northern California.
Forecasts of subzero weekend lows in Alberta, along with a potent winter storm moving into the upper U.S. West Coast, were chiefly responsible for the region's price strength. These factors were abetted by (and related to) Northwest asking customers to buy sufficient supply to meet their market demand, citing "drastically colder temperatures" starting Sunday throughout its service territory. Northwest said it and customers want to maintain their Jackson Prairie storage gas to offset OFOs and "to meet the cold winter pulls that will occur in the upcoming...season."
Monday's cash trading will get a boost after prompt-month futures rebounded by 15.7 cents Friday (see related story).
A negligible blip showed up Friday on the National Hurricane Center's Atlantic monitoring screen. A weak low-pressure area over the Gulf of Honduras was expected to move into Central America later that day and was given a near-zero chance of becoming a tropical cyclone.
There's a good chance that Friday's declines may not continue for very long. Warmer weekend conditions are expected to yield to chillier temperatures again as early as Monday or Tuesday in several regions, although the South-Central U.S. can expect a longer period of mildness.
Despite dropping about a dime in price for the weekend, Columbia Gas in Appalachia saw one of the biggest increases in volumes traded on IntercontinentalExchange (ICE). Columbia activity soared from 715,700 MMBtu Thursday to 847,700 MMBtu Friday, ICE said.
Northern Natural Gas signaled a fairly quick return of frigid conditions in the Upper Midwest. A bulletin board posting said the normal system-weighted temperature at this time of year is 32 degrees, while projecting that Friday's expected average of 29 would rise to 30 Saturday and 34 Sunday before dropping to 29 Monday.
It's pretty mild in the Rockies right now, said a regional producer, but things will definitely get colder again in the coming week. Friday's CIG-Henry Hub spread of 17 cents was relatively low, he observed, but actually CIG had been positive to the Hub for a short time when Rockies Express went into service. The producer said he thinks CIG and Henry likely will be at parity again when the 400 MMcf/d Bison Pipeline comes online to move Rockies gas eastward; that's now supposed to be sometime in December, he said.
Noting the spread of about 37 cents between Henry Hub and the screen Friday, the producer said he perceived a "great arbitrage opportunity" with prompt-month futures expiration as close as Wednesday -- but it likely would require having available storage injection space. You can put physical gas in storage and short the futures, he said; that is, sell futures today and buy spot gas for much cheaper, but only those with storage capacity can work it successfully.
A Midwest utility buyer said her area could get temperatures as low as the teens during the holiday weekend, but so far company gas throughput is a little on the low side for fall. Its storage is full, so it has been selling excess gas lately, she said, but it's been a good time to do so because spot prices have generally been above first-of-month indexes in recent weeks.
The Baker Hughes Rotary Rig Count registered one of the biggest declines in months for the number of rigs searching for natural gas in the U.S. The tally fell by 19 to 936 in the week ending Nov. 19, Baker Hughes said. Three rigs departed the Gulf of Mexico and 16 were deactivated onshore. The latest numbers are down 3% from a month ago but 29% above the year-earlier level, Baker Hughes said.
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