Cash natural gas prices retreated 11 cents on average Thursday as traders elected to factor in mild temperatures across the country and incorporate Wednesday’s screen weakness ahead of the release of government inventory data.
Declines were widespread, and the only gains were mostly at thinly traded points. The Energy Information Administration (EIA) reported an increase of 30 Bcf in its weekly storage report, slightly less than what traders were expecting, and prices shot higher initially. By the close, however, prices had relegated themselves to a few ticks either side of unchanged with the May contract adding 0.1 cent to $4.167 and June easing 0.3 cent to $4.200. June crude oil surged $2.21 to $93.64/bbl.
Moderate forecast highs across the nation sent prices for Friday gas trekking lower at major market hubs. The Weather Channel forecast a high in Minneapolis Friday of 70 with Chicago at 67 and Denver 63. Washington, DC, was expected to see a peak reading of 68, and Dallas was predicted to enjoy a high of 78. Los Angeles’ Friday high was pegged at 65.
At the Chicago Citygates, next-day deliveries slumped 17 cents to $4.25, and at the Henry Hub gas fell 6 cents to $4.19. Deliveries to El Paso Permian retreated 14 cents to $3.98, and at the SoCal Citygates gas for Friday delivery fell 9 cents to $4.28.
Points in New England were one of the few to make it into positive territory as next-day power prices provided a firm footing. IntercontinentalExchange reported that power for delivery Friday into the New England Power Pool’s Massachusetts Hub rose $1.29 to $47.91/MWh.
The New England Independent System Operator in its Morning Report said available capacity was 18,463 MW and system requirements were expected at 17,558 MW, leaving a nominal 905 MW surplus.
Friday deliveries to the Algonquin Citygates gained 23 cents to $5.39, and deliveries to Iroquois Waddington fell 2 cents to $5.02. Gas on Tennessee Zone 6 200 L gained 3 cents to $5.02 also.
Other eastern points suffered declines as next-day power prices eased. IntercontinentalExchange reported that peak power for delivery Friday to the PJM West Hub slid $6.58 to $39.59/MWh, and at the New York Independent System Operators Zone A market point (western New York) next-day power eased 25 cents to $36.70/MWh.
Gas deliveries to New York City on Transco Zone 6 fell 14 cents to $4.35, and at Tetco M-3 Friday packages came in at $4.38, down 9 cents. On Dominion Friday gas was 8 cents lower at $4.20.
Prices on the West Coast eased as dry and temperate conditions were forecast for the western U.S. Tom Moore, a meteorologist at The Weather Channel, said, “Most of the region will be dry on Friday [with] isolated afternoon showers and thunderstorms around northern New Mexico and southern Colorado.
“High temperatures will be mostly in the upper 60s and 70s across much of the region [and] warmer 80s and lower 90s [will] occur in the Central Valley of California and the deserts.”
Gas for Friday delivery at Malin fell 9 cents to $4.01, and gas into the PG&E Citygates slumped 8 cents to $4.23. At the SoCal Border parcels were seen at $4.15, down 9 cents, and on El Paso S Mainline Friday gas was 10 cents lower at $4.18.
Heading into Thursday morning’s Energy Information Administration (EIA) storage report for the week ending April 19, most trader and analyst estimates appeared to be bullish, coming below the five-year average of a 50 Bcf build and last year’s 43 Bcf injection for the week. Kyle Cooper at IAF Advisors in Houston projected a 34 Bcf increase, and a Reuters survey of 23 traders and analysts revealed an average 32 Bcf addition with a range of 19-40 Bcf. Bentek Energy, utilizing its flow model, calculated a 30 Bcf increase.
“We were looking for a build of 32 Bcf, so in the scheme of things you wouldn’t think 2 Bcf would make that much difference,” said a New York floor trader.
Inventories now stand at 1,734 Bcf and are 807 Bcf lower than last year at this time and 94 Bcf below the five-year average as well. In the East Region, 21 Bcf was injected, and in the West Region 2 Bcf was pulled. Inventories in the Producing Region increased by 11 Bcf.
The Producing region salt cavern storage figure increased by 8 Bcf from the previous week to 187 Bcf, while the non-salt cavern figure rose by 2 Bcf to 526 Bcf. The EIA first split Producing Region facility types in storage report footnotes in March 2012 in an effort to provide more comprehensive information on the relationship between inventory changes and types of storage facilities (see Daily GPI, March 26, 2012).
Addison Armstrong at Tradition Energy saw “traders shift[ing] their attention to the onset of normal spring temperatures next week and declining seasonal demand levels in the coming weeks. Weather forecasts appear to provide little support for rising gas prices in the coming weeks, with normal to below-normal temperatures expected across Texas and the Southeast, while normal to above-normal temperatures are indicated for the Midwest and the Northeast.”
In its Thursday morning six- to 10-day forecast, Commodity Weather Group saw a moderate push of cool temperatures into the nation’s mid-section. “The models are in general agreement on translating another cool push down through the middle of the U.S., but this event does not have the magnitude of recent powerhouse cold pushes,” said Matt Rogers, president of the firm. “The result is modestly elevated, mainly overnight heating demand increases in the Midwest mid-to-late six-10 day. The coolest anomalies are expected into the South, but the much weaker intensity means more comfortable versus cold anomalies.”
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