Despite fundamental support remaining weak for the most part, prices rose at nearly all points Wednesday. A few cases of flat numbers in the West were the exception to gains that ranged from a couple of pennies to around 15 cents. The largest upticks tended to be concentrated in the Midcontinent.
Actually, weather-based load is increasing a tad in some markets, although not to a degree that would seem to justify Wednesday’s fairly sizeable price increases at many points, two sources agreed. They also said the screen’s being up a few pennies at the start of Nymex trading before retreating later, coupled with the 2.8-cent futures rise from the day before, likely lent a smattering of bullish feeling to the cash market.
Chicago is going to get a little warmer for the next two days before turning cooler again, a marketer said. “It won’t really be all that hot” in the mid 80s, she added, “but we did get some power plant load for Thursday that we hadn’t been seeing earlier this month.”
One trader pointed out a supply tightness in the Gulf Coast that might not be readily apparent to the overall market. Trunkline LNG’s web site is reporting that deliveries recently have been reduced at its Lake Charles, LA facility, and sendout is down from about 1 Bcf/d normally to about half that this week, he said. “I’m hearing that some scheduled [LNG] shipments have been diverted to Asian nations because they’re willing to pay more,” he added.
The trader went on to say that the LNG shortfall may have contributed to “very tight basis” from the Gulf Coast to the Northeast. Gulf prices have generally held up better than the citygates, he said. He thought the initial screen firmness Wednesday likely was prompted by news of the formation of Tropical Depression Six (TD6) in the mid-Atlantic. However, he and others concurred that the depression is much too far away to be of any concern to the cash market at this time.
The Weather Channel reinforced this note by saying that although TD6 was moving westward and likely to develop into a hurricane eventually, it would not even reach the Lesser Antilles (the island chain between Puerto Rico and Venezuela) until after the weekend.
A Northeast marketer was among the ones attributing a rising cash market partially to the early advance at Nymex, but she acknowledged that the “weather load picture is still very weak around here.” She expects cash will “probably be a little softer” Thursday due to not only natural gas futures going down 4 cents, but to a plunge of nearly $2 in the crude oil contract for October to less than $44/bbl. Recent hints of increasing stability in crude exports from Venezuela, Iraq and Russia were enhanced by a government report Wednesday of a sharp rise in U.S. gasoline inventories last week.
In addition to modest temperature increases for parts of the Midwest, the South is starting to see more cities inching up to daily highs in the low to mid 90s. The Northeast is also warming up slightly but only into the 80s, a trader said.
PG&E’s lifting of a high-linepack OFO did little to counteract mild to cool weather in much of the West, which was decidedly the weakest regional market Wednesday. Hot weather there is now confined generally to the desert Southwest.
The perception of extreme weakness in September pricing continues. “I’m getting a lot of supply offers for September,” with the ones for indexed deals all at a discount, a Gulf Coast marketer said. People are starting to run out of available storage space as facilities near topping off, so that outlet for fresh production will be getting squeezed pretty hard next month, he concluded.
Another source reported seeing September Chicago citygate offers at the NGI index minus 1-1.5 cents, with bids running at minus 1.5-3.5 cents.
A Northeast trader expects a fairly easy bidweek, saying, “September tends to be just about our lightest demand month of the year.”
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