The approach of colder temperatures that would take Friday lows into the 30s in the Northeast kept spot prices rising in that region Thursday. But most other areas succumbed to predictions of weekend warming trends and the previous day’s 9.3-cent futures drop in recording lower quotes.
A few flat to a little more than a nickel higher locations in other scattered locations joined gains of about 30 cents in the Northeast. Otherwise, the rest of the market saw losses ranging from a couple of pennies to about 20 cents, with most of the larger ones clustered in the Midcontinent/Midwest and Rockies/Pacific Northwest markets.
The Energy Information Administration’s storage report had little impact on Thursday’s cash trading but will be an additional bearish factor going forward. Not only did the 37 Bcf addition to inventories in the week ending Nov. 4 exceed consensus estimates in the low 30s Bcf, but it confirmed that gas was still being injected after the “official” withdrawal season had begun three days earlier. However, Nymex traders seemed oblivious to the ostensibly bearish nature of the report as prompt-month futures fell almost imperceptibly by 0.3 cent (see related story).
Though both fell about a nickel, Tennessee Zone 4’s Line 300 is keeping up its new near-parity relationship with the zone’s Line 200. Line 300’s Thursday average in the mid $3.60s was only about 3 cents below that of Line 200; the day before Line 200 had been at a premium of 6 cents.
The CIG-Henry Hub basis spread widened a bit further to a CIG deficit of nearly a nickel after the Rockies pipe had started the week with a 2-cent premium Monday and Tuesday. But Kern River added about a penny Thursday to its day-earlier nickel premium over the hub.
The Northeast’s colder trend contrasted with temperature moves going the other way in the South and Midwest. Although the South’s eastern end would see little change from chilly or even get slightly colder Friday, most of the rest of the region could expect more moderate seasonable fall temperatures. And despite the Midwest remaining on the somewhat frigid side, temperature gains of 10 degrees or so in many sections will represent some relief from the cold.
Western Canada and high-elevation parts of the Rockies will be about the only regions still experiencing freezing-area or colder lows, with the rest of the West ranging from moderate to chilly.
A Gulf Coast trader had something of a shopping list to read in explaining why a generally soft market is likely to continue for quite a while. The above-expectations storage injection reported Thursday morning was just the latest in a series of bearish developments, she said. That and others — no major storm disruption of offshore supplies this year, continuing production growth led by shale gas, U.S. and global economy weakness leading to light demand, and generally moderate weather since this summer’s intense heat finally receded — should keep the gas market soft into the foreseeable future, she said.
At this point a really severe and long-lasting blast of cold weather appears to be about the only thing that will inject some meaningful strength back into prices, the trader said.
A Midwest utility buyer said his company had some heating load earlier in the week when overnight lows were briefly dipping below freezing and four inches of snow fell Tuesday night, but that was already fading as warmer temperatures were due to start returning Friday.
The buyer was unaware of any significant pipeline constraints. NGPL’s Compressor Station 107 outage means no low-priority service through the station (see Daily GPI, Oct. 28), but his utility was not having any problem with it.
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