Price moves continued to be mixed Tuesday, but this time flat to higher numbers nearly overwhelmed the occasional small loss. Although any potential tropical threat was still remote, the previous day’s 2-cent futures uptick along with scattered moderate increases in both heating and cooling load were enough to firm quotes at nearly all points.
About half a dozen locations, mostly in the Northeast, were down from a couple of pennies to a little more than a nickel. Only CenterPoint-South and Westcoast Station 2, where high linepack was still being reported by the pipeline, recorded drops of more than about 2 cents. Sumas, the major U.S. outlet for British Columbia supplies delivered by Westcoast, was flat after rising 3 cents a day earlier.
The rest of the market ranged from flat to about 20 cents higher. Although Iroquois Zone 2 in the Northeast saw the day’s top gain, most of the double-digit increases were clustered in the Rockies and Southwest basins.
After Monday’s scant support for the next-day cash market, October futures returned to being a negative influence as they dropped 3.1 cents (see related story).
A large low-pressure system moving into the central Atlantic had its odds of becoming a tropical cyclone within the next 48 hours upgraded Tuesday from 60% to 70% by the National Hurricane Center (NHC), which said conditions were expected to remain conducive for formation of a tropical depression late Tuesday or on Wednesday. If the system advances to tropical storm status, it would be named Ophelia. Despite a slow general westward movement, for whatever reason the system was reported as 1,500 miles east of the Windward Islands Tuesday afternoon after NHC had said Monday it was 1,450 miles to the east.
An approaching cold front had only limited effect in preventing Northeast points from participation in the overall gains, even though most regional temperatures were already fairly mild. Another cold front was due to drop into the upper reaches of the south-central states Wednesday, keeping a warm but fairly moderate mid South from experiencing much air conditioning demand. However, that area was bracketed by highs on either side of 90 in Florida and much of Texas-Louisiana. But an impressive cooldown was due in the Texas Panhandle and Oklahoma, with Amarillo, TX, and Oklahoma City forecast to see highs fall to around 70 and the mid to upper 70s, respectively.
A warming trend is expected around this weekend in the Midwest and will ease any cooling load, but for now lows mostly in the 40s likely have prompted quite a few citizens to fire up their furnaces temporarily. Cool conditions will continue to extend from the California coast and Rockies into the Pacific Northwest and Western Canada, but much of the desert Southwest and internal California will remain hot.
An Overage Alert Day issued by Florida Gas Transmission (see Transportation Notes) helped boost quotes for Florida Gas Zone 3 and the Florida citygate by about a nickel each.
The Katy Hub and Houston Ship Channel rose about a nickel and nearly a dime, respectively, now that area highs have returned to the low 90s following a cooling period last week.
Henry Hub, up about a nickel, saw volumes traded on IntercontinentalExchange jump from 845,200 MMBtu Monday to 1,189,100 MMBtu Tuesday.
Stephen Smith of Stephen Smith Energy Associates said Tuesday he had lowed a previous estimate of a 99 Bcf storage build in the week ending Sept. 16 to 95 Bcf. IAF Advisors analyst Kyle Cooper weighed in with an expectation of a 90 Bcf injection. Credit Suisse’s Stefan Revielle looks for an addition of 96 Bcf. In addition to anticipating a 94 Bcf volume in Thursday’s inventory report, Tim Evans of Citi Futures Perspective predicted injections of 98 Bcf, 113 Bcf and 109 Bcf for the weeks ending Sept. 23, Sept. 30 and Oct. 7, respectively.
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