Strong power burns and recovering export demand boosted spot gas prices for the Oct. 12-16 week. Stout gains were seen across the Lower 48, lifting NGI’s Weekly Spot Gas National Avg. 46.5 cents to $1.980.
With Hurricane Delta quickly moving out of the Gulf Coast region after making landfall on Oct. 9, temperatures rose back to summerlike levels across Texas, Louisiana and the Southeast. The returning heat sent prices higher across the region, with rising liquefied natural gas (LNG) demand giving markets an extra nudge.
Not every hub across the Gulf Coast sat in the black this week, though. Permian Basin pricing remained under pressure, even though production has sloughed off in recent days. With Waha falling back into negative territory, the weekly average was down a whopping 44.0 cents to only 2.5 cents.
Meanwhile, 50- to 60-cent gains were the norm in the Rockies and Midcontinent producing regions. Some of that hike was because of pipeline maintenance farther upstream that limited gas flows.
Continued heat in California, which prompted another round of coordinated rolling blackouts by Pacific Gas & Electric Co., led to a $1.760 week/week gain for SoCal Citygate, which averaged $4.835. Incoming cold on the East Coast boosted Transco Zone 6 NY 37.0 cents on the week to $1.305.
Futures prices experienced yet another week of large swings. Varying weather outlooks and LNG demand uncertainty were the major driving factors driving price behavior, but storage also weighed on the market.
After settling Monday at $2.881, the November Nymex futures contract plunged to $2.636 by Wednesday before a moderate recovery Thursday. Traders appeared apprehensive to move the contract decisively one way or the other on Friday, and November closed the week at $2.773, off two-tenths of a cent day/day and down 10.8 cents from the start of the week.
Although demand is typically at a seasonal lull in October, there is plenty of cold on the maps that could mean heating loads are on the cusp of rising. Bespoke Weather Services said the 11- to 15-day forecast has trended colder, particularly as it shifted eastward some of the cold air coming down from Canada. The forecast remains a “tricky one,” according to the forecaster, as there is plenty of cold air from western Canada down into the Rockies and Plains. The issue is how much of this may spill farther east and south into areas more crucial for natural gas demand.
“This is where models have been going back and forth the last few days, with the last few model cycles suggesting more eastward expansion of the colder anomalies,” Bespoke said.
Toward the end of the month, the North Atlantic Oscillation is set to move back positive and with the La Niña state still in place, there could be more Pacific flow as well, according to the forecaster. This would bring about the warmer pattern the forecaster has been looking for to start November, “but confidence remains below average for now until there is some consistency in the guidance.”
The Friday afternoon run of European weather model added 10 heating degree days to the outlook, with a chillier set-up for the last week of October.
Meanwhile, the market continues to be in waiting mode for full exports to resume from the Gulf Coast. Although LNG terminal maintenance and pipeline issues largely have been resolved, the timing of full exports from the Cameron facility is unclear.
On Friday, the U.S. Army Corps of Engineers, U.S. Coast Guard and other agencies were still working to remove a recreational boat from the Calcasieu Ship Channel following Delta. An oil rig that had been submerged was already recovered, and plans to remove a barge were expected to be finalized over the weekend.
The ship channel remained restricted, with only vessels with a draft depth of 25 feet or less allowed to move through the channel. LNG vessels typically have draft depths of more than 35 feet when loaded.
“Given the current rate of liquefaction, Cameron LNG will need to shut down or decrease operations significantly over the weekend in order to not reach local LNG tank capacity,” said Genscape Inc. analyst Amir Rejvani.
Once full exports are able to resume, though, an even tighter supply/demand backdrop may emerge. On Thursday, the Energy Information Administration (EIA) reported a 46 Bcf injection into storage inventories for the week ending Oct. 9, the smallest build in more than a month.
The EIA figure compared with last year’s 102 Bcf build and the 87 Bcf five-year average. It also came in on the low end of estimates leading up to the report.
A Wall Street Journal survey of 11 analysts expected injections to range from 47 Bcf to 65 Bcf, with an average build of 56 Bcf. A Bloomberg survey of seven market participants had a tighter range of projections, which produced a median of 53 Bcf. Reuters polled 14 analysts, whose estimates ranged from increases of 46 Bcf to 74 Bcf, with a median injection of 55 Bcf. NGI estimated a 54 Bcf injection.
Broken down by region, the Midwest added 19 Bcf into inventories, and the East added 15 Bcf, according to EIA. Mountain stocks rose by 5 Bcf, while South Central stocks climbed 4 Bcf. Within the South Central, salt facilities reported no change in inventories, while nonsalts rose by 5 Bcf, EIA said.
Mobius Risk Group said salt storage remaining flat week/week was a boost for market bulls. Looking ahead to the next EIA report, the firm said it appears there is a chance that salt storage could post a weekly withdrawal.
“Market attention is likely to quickly begin centering on the last week of October,” according to Mobius, “…and opinions on whether or not that week could see a sub-20 Bcf build may determine the path of November futures as we march towards expiry.”
Spot gas prices were overwhelmingly lower Friday as mostly comfortable weather conditions were on tap for the Lower 48.
The Midwest and Great Lakes were forecast to be chilly through the weekend as a cold shot dropped overnight lows into the teens to 30s, according to NatGasWeather. The southern and eastern United States were expected to be “comfortable to warm,” with daytime highs forecast in the upper 60s to 80s. Hotter weather was to remain from California to Texas.
“But with chilly nights across the Midwest and Ohio Valley through the weekend, national demand will be stronger than normal,” NatGasWeather said.
Midwest prices also fell, though not as sharply. Chicago Citygate spot gas fell 7.5 cents to $2.135 for gas delivered through Monday.The Midcontinent posted similar declines, while prices throughout Texas were mixed. In the Permian Basin, however, a steep sell-off occurred amid the widespread losses in downstream markets. Waha plunged 39.0 cents to average minus 31.5 cents for gas delivered over the three-day period.
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