Although Friday’s price declines were neither universal nor as severe as those on some Fridays earlier in October, Monday’s market did match up with a couple of predecessors in seeing large rebounds across the board. Gains were as small as about 35 cents, but a big majority were half a dollar or more and ran as high as a little more than 90 cents at the PG&E citygate.
The largest increases tended to cluster at western points, which is where most of the nation’s remaining heating load resided. Though generally confined to higher elevations, winter storm alerts were in effect Monday in California, Idaho, Nevada, Oregon, Utah, Washington and Wyoming, and snow levels in northwestern California may be down to 4,000 feet or less by Tuesday morning, according to The Weather Channel.
Western numbers also derived support from the absence of high-linepack OFOs by the California utilities. There were some in effect over the weekend (see Transportation Notes), “but all is clear for Tuesday,” a marketer said. She noted that despite major rebounds in cash Monday, with the screen falling more than 20 cents and fundamental support for cash remaining weak, she would expect to see moderate softness in at most points Tuesday. However, she allowed that the West might eke out further gains because of its cold weather.
Otherwise heating load remained on the scarce side in most of the East, but prices were able to ride the momentum of the natural gas futures spike of nearly 41 cents on Friday (not to mention new record peaks in heating oil and crude oil futures that day), along with the return of industrial demand from its usual weekend hiatus, to sizeable rallies Monday.
Some air conditioning load continued in South and East Texas, but at lower levels. Daily highs in Houston, which had been hitting the low 90s last week, are predicted in the mid to high 80s through Friday.
But a utility buyer in the Lower Midwest said area weather “is great in the mid 60s.” Because of the low demand period and his company being in a long supply position, it is in selling mode currently, he said. It’s nice to be able to sell storage gas bought for $5 or so a few months earlier for more than $7 right now, he continued, “but I’m not looking forward to buying gas again in November” when it gets cold for $7-8 or more.
The start to the November bidweek seemed to be a little more active than most such periods. A marketer said he was seeing Chicago citygate basis “anywhere from plus 10 to [plus] 14 cents today,” and it was tending to get a little stronger with the screen coming down. Fixed-price Chicago deals started in the high $7.80s and moved lower, again due to futures weakness, to as low as the mid $7.60s. Some usual participants in early deals were hanging back this time, possibly hoping for either a rebound or for prices to move even lower, the marketer said.
A western trader reported these fixed-price bidweek deals done Monday: Waha from the mid $6.90s to the low $7.00s; Northern Natural demarc in the $7.40-44 range; and El Paso-San Juan Blanco in the mid $6.80s.
A Midwestern utility buyer said he had been hearing that low to mid $7.40s area for demarc earlier in the day, but the screen weakness had taken offers slightly lower to the high $7.30s in the afternoon. He also reported hearing demarc basis of minus 50 cents.
Shut-in Gulf of Mexico production continues to return mostly in dribs and drabs. With 18 companies reporting to it, Minerals Management Service said outages had fallen to 1,518.08 MMcf/d Monday — only 3.5 MMcf/d less than Friday’s count. Cumulative shut-ins since Sept. 11 did surpass the 100 Bcf mark, rising to 101.702 Bcf Monday, equivalent to 2.217% of annual Gulf production, MMS said.
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