Aftermarket premiums over first-of-month indexes got much smaller Wednesday when incremental numbers fell anywhere from a dime to about 30 cents. Most drops were between 15 cents and a quarter, with those in the Rockies tending to be smallest.
Sources attributed most of the weakness to anticipations of yet another storage refill report near 100 Bcf Thursday morning, along with a second straight day of declining gas futures. Crude oil and heating oil futures settled up for the day after recovering from early softness following a supply report of U.S. crude stocks being unchanged in the previous week.
The weather outlook was mixed, according to a trader who pointed out that the Northeast was expected to get more winter-like Thursday while the Midwest is due for a mild warming trend after frost and freezing advisories were issued for Wednesday night. Southern conditions will remain mild to cool, and most of the West will continue to see highs near or above seasonal norms, according to The Weather Channel.
An example of the near-convergence between daily and bidweek numbers was Henry Hub’s average of $4.47, only 2 cents above the NGI index of $4.45. Likely due to cold weather in the Midwest, the Chicago citygate remained 8 cents over the $4.64 index Wednesday.
A Florida utility buyer reported keeping purchases small because of both mild weather and “the pipeline [Florida Gas Transmission] is having to cope with too much linepack.” However, FGT did not follow through on its advisory that an Underage Alert Day notice might become necessary Wednesday.
Some upward price pressure in the Southwest was relieved when El Paso canceled an Unauthorized Overpull Penalty alert (see Transportation Notes). But a western trader observed late prices coming up a bit, saying, “Maybe some folks were waiting for better deals and maybe they got caught short, but there was a number of traders looking for gas at the end. I doubt that little push had much affect on the overall market, however.”
Referring to hearing about sleet in Michigan Tuesday, a Southeastern utility buyer commented, “Better them than us.”
Tropical Storm Kate was upgraded to hurricane status, but its location about 1,350 miles east of Bermuda kept it from having any gas market significance even though the system had taken on a west-southwest tracking.
Of more immediate interest was the National Hurricane Center’s Tuesday night posting that a reconnaissance aircraft investigating a low-pressure area in the southwestern Gulf of Mexico “reported flight-level winds of 59 mph within a thunderstorm complex to the west of a 1,006 mb [millibar] low center.” However, the low did not qualify as “a tropical cyclone at this time,” NHC said, adding that it would continue to monitor the system. No update had been issued as of deadline Wednesday afternoon.
The National Weather Service anticipates that next week will be chilly in the eastern U.S. It predicted below normal temperatures for the Oct. 6-10 period east of a line running from central Texas through Wisconsin; Maine and peninsular Florida were the exceptions where NWS looks for normal readings. It expects above normal temperatures from the Upper Plains through much of the Rockies into central California.
Winter’s “starting gun” has gone off for the central and eastern U.S, Weather 2000 said. In a Tuesday advisory, the consulting firm went on: “15 degrees in North Dakota, 20s in Iowa, upper 30s in western Tennessee, chilly lake-effect rain showers. Reports from last Thanksgiving? No, actually observations from the morning of September 30th, 2003!…[But] it can not be emphasized enough that such cold will come in sharp waves, but also be routinely interrupted by milder or more seasonable temperatures. As we’ll discuss deeper into the winter season, even the most brutal, coldest winters in recorded history featured several warm days and mild weeks.”
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