As NGI sources had suspected the day before, the cash market couldn’t keep rising indefinitely without visible means of support. Sure enough, eastern prices finally reacted Thursday to the one-two punch of weakening futures and only a modicum of weather-related demand by registering declines that were mostly in the vicinity of a dime but ranged from about a nickel to a little more than 20 cents.
It was a different story in the West. The Permian/Waha and California markets were flat to slightly higher, while Pacific Northwest/intra-Alberta quotes were mildly lower. But the Rockies and San Juan Basin built on Wednesday’s rally with even bigger jumps Thursday that ranged from nearly 60 cents to about 90 cents or so. There was a bit of cold weather in the eastern Rockies to spur demand a little, but the chief instigator of the spikes was a maintenance outage in Jonah Field behind the Opal Plant taking approximately 250 MMcf/d off the market, a western trader said. The Jonah shortfall was due to start Friday and last four days, he said.
Another source said he understood that Kern River had started buying 200 MMcf/d to build linepack in anticipation of the May 1 startup of its expansion. However, a pipeline staffer said that while the 200 MMcf figure was correct to some extent, it represented the total amount of linepack that Kern River was adding prior to May 1, and that such purchases were being made in increments of about 30 MMcf/d. (A bulletin board posting Thursday said that due to operational conditions, it was imperative that “there be absolutely no drafting on the Kern River system. Should point operators not stay on rate with scheduled quantities, Kern River will be forced to take further action.”)
The EIA said 61 Bcf was added to storage inventories last week, a volume that was at the top end of the range of prior expectations. Nymex traders treated it as the bearish number that it was, although the screen’s decline of just under a dime for the day represented a recovery of nearly a dime from the daily low. Because most cash trading was completed by the time the report came out, its bearish impact is expected to be reflected in Friday’s trading for the weekend.
A marketer said the Florida market is “almost dead right now” but should pick up as it gets hotter in May.
Although it’s having essentially no immediate market impact, something that could become significant as summer approaches is the warning Thursday that the 1,250 MW South Texas Project 1 nuclear unit may stay shut down until late summer. The unit was taken down in late March for refueling, which usually takes a little more than a month. But inspectors found boric acid deposits on the bottom of the reactor vessel, indicating a possible leak of reactor coolant fluid and raising prospects of extensive repairs.
May business was predictably dominated by index and basis deals Thursday, but one western source reported that after an initial Opal deal in the low $4.40s, several more ranging from the mid $4.20s to the low $4.30s followed. He reported seeing offers around $4.25 for San Juan-Blanco on an online platform, which he considered “ridiculous because it’s below our Opal numbers.”
A western source reported seeing bidweek prices “shaping up at about the same levels” as swing gas was trading Thursday.
A marketer said there’s good reason to expect fairly strong Northwest-domestic pricing for May. The addition of nearly 900 MMcf/d in expansion capacity to Kern River’s system means the Opal Plant will no longer be able to serve all of the pipeline’s needs, and that will require moving greater volumes than before to Opal on Northwest, he said.
A producer reported trading the Chicago citygate for May at NGI‘s index minus 1.5 cents.
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