With Tuesday lows forecast to be in the 30s or less in most of the U.S. and Canada, prices rose strongly across the board Monday. Only California, parts of the desert Southwest and some locations in the South were expected to not go below the 40s. The previous Wednesday’s 7.3-cent advance by December futures (abetted by a further 15-cent uptick in the lightly traded Friday session) and the return of industrial load from its decline over the long holiday weekend provided further support for Monday’s cash market.
Traders who had storage capacity available likely were making injection purchases to stock up because widespread frigid weather is now expected to last into early December, one source suggested.
Triple-digit increases were frequent amid gains ranging from a little more than 55 cents to about $2.30. El Paso’s Permian Basin and San Juan Basin pools, along with the Southern California border, El Paso-South Mainline/North Baja and Kern Delivery, scored all of the spikes of $2 or more.
Although some sections of the desert Southwest such as the Phoenix area are forecast to be merely chilly, major heating load has surfaced in other parts of the region. For example, the low in Flagstaff, AZ, to the north of Phoenix will be rising only to the mid-20s Tuesday after having been in the mid-teens Sunday.
Other factors causing dollar-plus gains at most western points were SoCalGas ending a high-linepack OFO during the weekend; Kern River reporting low linepack throughout its system Monday and posting a plea for shippers and operators to refrain from drafting; predictions of moderate to heavy snow Tuesday in some sections of the Rockies; and El Paso warning shippers that it may have to declare a Strained Operating Condition-Draft due to higher loads, overtakes of scheduled deliveries and underperformance at some receipt points (see Transportation Notes).
The Great Lakes area can also expect some snow as an upper-level disturbance moves through Tuesday, The Weather Channel said.
The cold is especially intense in Western Canada, where the Calgary forecast for Monday had a very narrow temperature range ranging from six to 11 degrees. However, NOVA Inventory Transfer and Westcoast Station 2 saw some of Monday’s smallest increases of about C75 cents and C70 cents, respectively.
A Gulf Coast producer saw Monday’s spikes as based both on cold weather Tuesday and also on continued cold down the road. What is important is that the frigid conditions will cover a very widespread area through early December instead of being limited to one or two regions. However, it looks like a good deal of the U.S. will start warming up again late next week, he said.
The producer was also taking care of December business as bidweek got under way Monday. He reported last-day settlement basis of minus 55 cents for both Transco Station 30 and Tennessee Zone 0 (the Tennessee deals were for “point gas” and not pool gas, he noted). He also said he sold a lot at various Gulf Coast points for index plus 0.25-0.5 cent.
Many buyers already have much of their December baseload covered by winter term contracts, but are picking up incremental packages, the producer continued. At least for now buyers are tending to hold back on committing to deals, he added; suppliers have “got to work it” to make sales.
The National Weather Service (NWS) expects below-normal temperatures almost everywhere in the Lower 48 U.S. states in the first few days of December. In its six- to 10-day forecast posted Sunday for the Dec. 1-5 period, the only section where NWS did not predict below-normal readings was in Florida (excluding the western half of the Panhandle) and southwest Georgia. Above-normal temperatures are expected only in peninsular Florida. The greatest temperature deviations below normal will occur in the Midcontinent, the western two-thirds of the Midwest and the Upper Plains, NWS said.
Baker Hughes counted 1,424 drilling rigs actively seeking natural gas in the holiday-shortened week ending Nov. 21 (https://intelligencepress.com/features/bakerhughes/). That was down 31 rigs from the previous week. The Gulf of Mexico tally increased by one, Baker Hughes said, but 32 onshore rigs quit the gas search. The number was 1% less than a month earlier but up 2% from the year-ago level.
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