Cash prices jumped nationwide Monday with gains of 10-45 cents in response to slightly stronger gas futures prices (August was up 8.5 cents), 80-90-degree heat in many major markets, and expectations of higher cooling degree days (CDD) this week. The National Weather Service is forecasting that CDDs will be about 17% above average for the week.
The largest gains Monday were seen in the West where points such as the Southern California Border, El Paso San Juan and Waha rose more than 40 cents. A number of western price spreads to the Henry Hub also tightened more than a quarter.
SoCal Border prices rose 42 cents to $5.30, making it flat to the Henry Hub, compared with a spread of minus 25-30 cents on Friday. That shows a marked recovery from the high-linepack situation late last week. SoCalGas issued an operational flow order on Friday, and flows into Southern California Gas for Monday’s gas day dropped 18% (546 MMcf/d) to 2,520 MMcf/d, according to Bentek Energy’s Hub Flows report.
Nevertheless, demand remains strong in Northern California and the Pacific Northwest where temperatures are above normal. “Spreads have been covering full tolls,” said a Canadian producer. “But there are a number of things that could serve to weaken spreads this week. The Stanfield compressor on Northwest Pipeline had some problems last week but they finally got that fixed. They should start bringing gas in again on Northwest Pipeline onto PGT [Gas Transmission Northwest].” Maintenance at the Stanfield compressor station was completed on Saturday and the physical capability at the compressor was restated to 240 MMcf/d, Gas Transmission Northwest (GTN) said in a bulletin.
Westcoast also was back to normal over the weekend after an outage last week. Its Pine River Plant was hit by lightening and was down for about a week, cutting about 300 GJ of gas supply. That drove up prices at Station 2, leaving only about a 10-12-cent price differential to AECO last week compared to the recent 25-40 cent range. “Spreads were back to about 30 cents today so we could tell that gas was back onstream,” the Canadian producer said. Station 2 was the market low point Monday with prices only in the low C$4.60s/GJ.
“Overall I think you won’t get as much value on the [GTN] system this week because you will have more access to the Rockies gas again after that was unavailable for about 10 days. When Stanfield receipts were down, all they had was Alberta gas to draw on.”
Northwest Pipeline also is not accepting requests for interruptible storage injections at its Jackson Prairie Storage facility and is requiring interruptible storage customers to bring their balances to zero by July 14. That could help put downward pressure on Northwest prices. “It might just drive the Sumas prices lower because I think Jackson Prairie peaks on that more than on the Alberta market,” the producer said.
California prices, however, remained fairly strong Monday. Malin was up more than 20 cents to about $5.15.
In the Midwest, Chicago also added about 20 cents to arrive in the mid $5.20s. Spreads to the Hub tightened to about minus a nickel from minus 12 cents Friday. Gas flows into Chicago on Monday were up about 16%, or 291 MMcf/d, according to Bentek Energy. Midwest temperatures remained above normal, but were falling as a few showers and storms rumbled across the region stalling a cool front.
From Tuesday through the weekend, the Plains states are expected to really heat up. High temperatures will peak near or above 100 in many locations by late week from North Dakota to Kansas, according to the Weather Channel. Northern Demarc gas flows on Monday were up 10% to 1,096 MMcf/d. Prices at Demarc rose more than 20 cents.
Temperatures in the East were near normal Monday and are expected to remain seasonal this week. In the Gulf Coast region, cash prices showed the smallest daily market gains, with many points adding only about 15 cents. And in the Northeast, prices rose 20-25 cents. Transco Zone 6 New York, for example, added about 20 cents, but its spread to Henry Hub dropped about a nickel.
“It was relatively quiet today,” said a New England marketer. “Prices were a little stronger, but trading was weak. It’s going to cool off in New England midweek and then heat up a bit for the weekend. Prices were up about a quarter to the $5.80s on Algonquin. It’s up a little bit, but not much. I would expect prices to stay relatively subdued this week.”
A Gulf Coast trader noted that high storage levels continue to back up pipeline flows and could become a more significant problem if the hurricane season fails to live up to its billing.
“You can’t park gas on many of the pipelines. Some of them won’t take pay-backs. All of them are pretty tight and they probably will get tighter unless we have a hurricane,” he said. “I think a bunch of them are really hoping for a temporary supply shortage to help operations.”
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