Cash prices inched a few cents higher across most of the country Friday in response to the rebound of gas futures above $5 on Thursday and slightly higher daily power prices. However, western spot points eased a few cents, and current western cash came more in line with forward prices, possibly allowing western storage injections to pick up steam.
“It was really a quiet trading day and prices were finally flat to next month for the first time all week,” said a California-based marketer. “It had been trading 5-10 cents above next month to encourage people to pull gas out of storage or at least not put it in storage because of the generation loads out here. There might even be a net withdrawal in the West in next week’s EIA storage report,” he speculated.
“Even though prices came off a little we’re still pretty warm out here, about 98 degrees in Sonoma County, CA. We normally get the fog at night that cools things off, but we haven’t gotten any fog at all. California has been withdrawing gas from storage nearly all week.”
He said SoCalGas had been pulling a couple hundred decatherms a day every day of the week to meet generation loads for cooling demand. The SoCalGas forecast for the weekend showed a small injection, however. “Loads come off for the weekend. On Thursday, SoCal pulled 225,000 Dth from storage and for the weekend they are going to inject about 200,000 Dth/d. PG&E is still withdrawing gas for the weekend. But storage levels are still in pretty good shape.”
The California Energy Commission said on July 17 that storage in California stood at 185 Bcf, less than the 200 Bcf at this time last year, but above the 150 Bcf in 2001. The commission issued a press release Friday, urging Californians to conserve power use to preserve gas supplies for winter.
The California marketer said PG&E Citygate prices were flat to a penny or two below Thursday’s prices, but just above $5.00s. Malin prices were in the low $4.60s. Composite 24-hour systemwide temperatures Friday across PG&E’s system were forecast to be 79 degrees, which is about 12 degrees above normal, and temperatures were expected to fall a couple degrees over the weekend. “It’s going to be above normal temperatures out here for a while,” the California trader noted.
The National Weather Service’s six- to 10-day outlook shows the continent split down the middle with above normal temperatures over the West, below normal temperatures over the East and a sliver of normal temperatures down the middle.
Eastern temperatures were mild all week and prices fell about 20 cents in total at most locations Monday to Friday. Northeast prices were flat to up or down a penny or two on Friday with New York in the low $5.30s, and New England Citygate points in high $5.30s to $5.40. “Going into a weekend things got really soft in the market area. We don’t really have any hot weather,” said a utility fuel manager. “Mid-80s is the high, so there is very little demand. There was some demand in the Boston area from off-system generators on Friday, but not a whole lot. Power prices came up a little bit. But the weather is supposed to be moderate again next week, with peak highs of 85 degrees.
“We haven’t had any heat to speak of so I would expect the next storage injection to be of pretty good size even with the supply cuts from Claudette,” she said. “Maybe we will see an 85-90 Bcf refill instead of 110 Bcf. I still think it will be enough to have a downward impact on the market.”
A Midwestern marketer disagreed. “With the Gulf production shut ins, I expect the storage number to be relatively small compared to last week. I think it’s expected to be low even with the weaker demand this week. We’re expecting low 80s Bcf at the most.”
He reported an uneventful trading day Friday with a tight low $4.90s to low $5.00s range at Chicago. “With the weather as mild as it is, I would expect that prices will come down at the beginning of next week rather than move up,” he said. “Almost everything is back to normal in the Gulf.”
Gulf Coast points in Louisiana were up about 1-5 cents on average Friday between the high $4.90s to a few cents more than $5.00. Most Midcontinent points were between the high $4.70s and high $4.80s.
Minerals Management Service spokesman Barney Congdon said Gulf of Mexico production operations were back to normal on Friday with no reports of damage from Hurricane Claudette earlier in the week.
“There was no damage. The thing kind of eased through the Gulf with [mostly below hurricane force winds],” he noted. “It takes producers a while to get back out there and get production back up to peak levels. But I think everything is back to normal today.”
MMS released its final shut-in report on Claudette on Thursday, showing 34 platforms remained evacuated, and 706.7 MMcf/d of gas production and 19,031 bbl/d of oil production remained shut in. Congdon said all the production platforms were remanned on Friday and nearly all production was back.
The cumulative total of production shut in due to Claudette (Friday July 11 through Thursday July 17) was 8,042.85 MMcf, which is equivalent to 0.158% of the 5.1 Tcf in annual natural gas production of the Gulf of Mexico. The cumulative shut-in oil production from the hurricane was 1.27 million bbl, or about 0.22% of total annual oil production from the Gulf (584 million bbl). At her peak power, Claudette forced about 2.7 Bcf/d to be shut in, mainly in the western Gulf of Mexico. The hurricane moved up Matagorda Bay along the central Gulf Coast of Texas on Tuesday at about 11 a.m. CDT with maximum sustained winds of about 80 mph.
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