Despite weather fundamentals remaining weak for the most part, cash prices were able to ride the screen’s 16.2-cent gain Tuesday and modest further futures strength the next morning to post gains across the board Wednesday.
Once again one point (CenterPoint East this time) fell slightly short of a dime increase, averting an all-points advance in double digits. Otherwise, upticks ranged from about 15 cents to half a dollar and were fairly homogenous among the various market areas.
The market isn’t totally devoid of cooling load, as a heat buildup in parts of the West will have highs returning to around 100 in the desert Southwest. And the Northeast is starting to warm up, with New York City and Boston respectively expected to go from Wednesday highs in the low 70s and upper 60s to the upper 80s and upper 70s Thursday. But temperatures generally remain below normal in the Midwest and South. A cold front from Canada will keep things unusually cool in the northern Plains and Upper Midwest Thursday, according to The Weather Channel, and most of the South will fail to get above the 80s.
Although Tropical Storm Florence was suggested as a possible factor in this week’s continuing rally, any possible influence on the gas market should be fading soon.
According to the National Hurricane Center’s (NHC) latest projected tracking for Florence, it’s starting to look like this storm wants to emulate predecessor Tropical Storm Debby in staying well out in the Atlantic and possibly never contacting land. The NHC looks for Florence to continue on a west-northwesterly path through early Saturday afternoon before turning more to the north-northwest and then further altering its path to a due north direction Sunday.
The NHC said Florence was getting better organized Wednesday and could become a hurricane Thursday. At 5 p.m. AST Wednesday the storm’s center was about 770 miles east of the northern Leeward Islands and about 1,240 miles southeast of Bermuda. Maximum sustained winds were about 50 mph — 24 mph short of hurricane status.
Besides growing heat, supply issues helped support prices in the West. Kern River reported low linepack Wednesday in its three (of four) farthest downstream segments. And although PG&E did not issue an OFO, it projected linepack levels remaining just above its minimum target level through Friday.
On the other hand, some additional supplies could start arriving in western markets as soon as Thursday. Questar ordered interruptible storage customers at its Clay Basin facility to start emptying their accounts within 30 days starting Thursday (see Transportation Notes).
For a Midcontinent producer, this week’s cash strength in the face of light weather-related load “is all screen-driven.” He pointed to Tuesday’s gain by October futures and noted that the contract was a little stronger during cash trading Wednesday morning, although it wound up 4.5 cents in the red by the end of the day. He reported seeing Panhandle Eastern numbers up nearly a quarter. Florence is looking very much like a dud as far as gas market impact, so that certainly can’t be much of a factor in cash price strength, he said.
However, a western source perceived some price support from the tropical storm, saying it was “making people hedge their bets” because they’re thinking, “The big one is still around the corner.” Also, the generally moderate weather is somewhat deceptive, he said, because “it’s still hot in some places.” Also, nobody wants to be caught short just yet, he added. The source looks for a fairly large storage build to be reported, saying everybody in his small “e-mail group” of traders is estimating a 68-78 Bcf range.
The Reuters news survey of 16 industry players found a consensus expectation of a 66 Bcf storage injection to be reported for the week ending Sept. 1. The estimates ranged from 54 Bcf to 78 Bcf. Analyst Jim Osten of Global Insight predicted a build of 70 Bcf for last week, rising to 81 Bcf in the current week.
©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |