Tuesday’s upward momentum carried over to Wednesday as most cash point averages for Thursday delivery climbed. Increases were predominant in every region except the East, which saw a few gains sprinkled in amongst no changes and declines.
While gains won the day, most were between a penny and a nickel, perhaps inspired by the 1.3-cent climb in June natural gas futures on Tuesday. While the Gulf, Midcontinent, Rockies and West regions saw one or two small declines apiece, the East Region, much like on Monday (see Daily GPI, May 4), was once again divided. Cash point averages at places like Iroquois Zone 2 and Algonquin Citygate dropped one to two pennies, while spots like Dominion and Dracut added one to three pennies.
Like most everyplace else, Midcontinent points have been pretty quiet.
“There is not a whole lot happening out there right now. The only real game in town is the utilities’ demand for storage,” said a Midcontinent marketer. “Spreads are really coming in. OGT is not as strong as it was last month, which is pretty funny because last month it was highest price in town at 10 cents above Midcontinent. Now it is dragging even or lower than Midcontinent by a couple of cents. What likely happened is everyone sent their gas to the highest price last month at OGT, too much supply showed up, and now we’re seeing the fallout. At the end of the day, the market always returns to supply and demand.”
Other spreads are also converging, the marketer added. “The TexOk-Midcontinent spread is tightening a bit here. Prices everywhere are becoming the same thanks to the current robust storage situation and the vast pipeline infrastructure we have today,” he told NGI. “Anytime there is a big spread, people are going to get that gas because of all of the pipelines in the ground currently. People have the ability to grab whatever spread they can, which is why you don’t see much spread anymore. It’s tough to make money out there nowadays.”
Cash traders will be without screen support on Thursday as front-month futures dropped 2.2 cents to close at $3.991 (see related story).
Turning attention to Energy Information Administration’s (EIA) natural gas storage report for the week ending April 30, it appears most industry insiders are looking for a 70 Bcf to 80 Bcf injection to be revealed Thursday morning at 10:30 a.m. EDT.
A Reuters survey of 26 industry players produced a 73 Bcf to 89 Bcf injection range with an average build expectation of 80 Bcf. Bentek Energy’s flow model projects a 75 Bcf injection, which would bring inventory levels to 1,987 Bcf. The research and analysis firm noted that an injection of 75 Bcf would bring stocks to 307 Bcf above the five-year average and 59 Bcf above the five-year max.
The number revealed Thursday will be compared to last year’s 87 Bcf injection for the similar week and the five-year average build of 70 Bcf.
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