Cash quotes nationwide showed nearly double-digit gains on Thursday, but little strength was seen at Gulf Coast points. Western prices firmed based on strength at AECO and prices rose at eastern pipelines.
Delivery points along the Gulf Coast curiously did not respond to the initial bullish reaction to inventory numbers reported by the Energy Information Administration that were somewhat greater than expected. According to IntercontinentalExchange (ICE), the Houston Ship Channel registered a loss of 2 cents and Henry Hub traded flat.
The reported inventory build of 78 Bcf was greater than what traders were expecting. Broker ICAP was looking for an increase of 67 Bcf, and a Reuters survey showed an average 69 Bcf. Bentek Energy, utilizing its North American flow model, predicted a 67 Bcf build.
Futures prices nonetheless rose. At settlement, December futures had risen 2.9 cents and January had gained 1.9 cents (see related story).
“Maybe most people already expected that, and it was already factored in,” said a Gulf Coast marketer. In spite of numerous surveys prior to the report’s release, the consensus seems to be that errors are likely to be on the high side with such strong production coming out of the shale plays.
“When we came in this morning, Nymex was down a little bit, and a lot of the Gulf Coast gas is traded very early,” the marketer said. “I’m normally finished by 7:30 CDT, and the trading is getting earlier and earlier and earlier so the daily deals that were done today would not have been influenced by Nymex. Most of them trade before that number comes out.
“There is a lot of gas to be placed, and you come in and hit the ground running. We are not having problems finding market; there seems to be plenty of market places, but that tells me a lot of this gas is going in the ground.”
West Coast prices rose following strength at the AECO Hub. Five SoCal delivery points monitored by ICE rose an average 15 cents and three PG&E points posted an average gain of 10 cents.
“AECO has been the main driver and AECO is stronger right now and everything is moving accordingly; Citygate, SoCal it’s not just one location,” said a West Coast marketer.
AECO is a hub and a lot of people in the West and Midcontinent will spread to AECO, and if one player has an interest in buying or selling it can move things around a little bit, the marketer said. “Locations like PG&E citygate will move based off of that. The spread will stay the same, but AECO will become stronger and move the citygate.”
NGI data showed AECO-C rose 11 cents to $3.26.
Forecast weather may have also played a part in West Coast strength. “A Pacific storm plowing into the West during the second half of the week will spread cold air, low-elevation rain and mountain snow southward from Washington to California and inland to other states,” said AccuWeather.com meteorologist Alex Sosnowski.
“The Pacific storm will bring rain or at least rain showers to Seattle, Portland, San Francisco, Los Angeles and San Diego, but snow will reach pass levels as the storm rides a wave of cold air and a pattern change. The expected rainfall in Southern California is not likely to be earth-shattering, but any rain after a spell of dry weather will cause slick roads and auto accidents. Much of the West has experienced above-normal temperatures during October. At least the first half of November will average below normal in many areas as a result of the switch.”
Prices were strong at eastern points, but the day’s highest gain was Algonquin Receipts with an increase of 50 cents, according to NGI data. Tetco M-3 posted an 8-cent gain, and Transco Zone 6 NY added 12 cents.
Algonquin Gas Transmission (AGT) issued a capacity constraint notice effective Nov. 3 and Nov. 4. AGT is the dominant interstate pipeline serving New England. It operates more than 1,000 miles of natural gas pipeline with 1.5 Bcf/d of delivery capacity and has direct connections to five major interstate pipelines.
AccuWeather.com forecast that the high in Boston Thursday of 63 would drop to 52 by Friday.
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