Cash gas prices for Thursday delivery rose 6 cents on average overall. Particular strength was noted at Gulf locations, but points in the Northeast were firm as well. California points in the north saw gains, while operational issues prompted an oversupply of gas and prices fell on SoCal Gas Pipeline. At the close of futures trading November had risen 0.8 cent to $3.475 and December gained 1.5 cents to $3.783. November crude oil tumbled $1.14 to $91.25/bbl.
Volatile pricing for next-day gas rattled through California. According to a Northern California trader the higher prices “were all due to the screen,” but in southern portions of the state an operational flow order was declared by Southern California Gas. Approximately 320 MMcf/d of injection capacity was lost Tuesday when a compressor failed at the Aliso Canyon storage facility, according to Sempra’s Envoy website. SoCal Gas declared an operational flow order as receipts exceeded capacity by 68,459 MMcf/d.
Quotes at Malin gained 11 cents to average $3.37 and Thursday deliveries to PG&E Citygate rose by 5 cents to $3.93. At SoCal Citygates Thursday gas was 8 cents lower at $3.53 and at the SoCal Border deliveries for Thursday skidded 8 cents to $3.42. On El Paso S Mainline next-day gas came in at $3.42, down 7 cents.
At eastern points maintenance issues prompted swings in next-day quotes. On Millenium Pipeline next-day quotes surged 25 cents to $3.36 as work at the Ramapo meter was completed. Millenium said it would work closely with Algonquin Gas Transmission to match Algonquin scheduled volumes.
Eastern marketers said they thought “there would be some issues regarding maintenance on pipelines serving Marcellus production, but it didn’t seem to make much of a difference.”
Gas into the Algonquin Citygates for Thursday delivery added 3 cents to average $3.61 and deliveries headed to Iroquois Waddington jumped 13 cents to $3.74. On Tennessee Zone 6 200 L next-day gas also rose 13 cents to $3.74. Gas at Tetco M-3 tacked on 3 cents to $3.44 and parcels into Transco Zone 6 New York added 6 cents to $3.41.
Tennessee Zone 4 Marcellus added 23 cents to $3.25 and Tennessee Station 313 gained 12 cents to $3.39.
Gulf points were particularly strong. Gas into ANR SE added 7 cents to average $3.21 and deliveries to Tennessee Gas Pipeline 500 L were higher by 8 cents to $3.28. On Columbia Mainline gas rose 7 cents to $3.21 and at the Henry Hub Thursday volumes added 8 cents to $3.26. On Texas Eastern E LA next-day gas was up 7 cents to $3.23. On Transco Zone 3 gas rose 6 cents to $3.23.
Futures traders saw little action, but “it was steady,” said a New York floor trader. “We are closing higher than we were, so that is a good sign. In the realm of things we traded over the $3.50 mark. We need to continue forward and get that action going.”
Getting that action going may not be too difficult once the market absorbs Thursday’s expected injection numbers from the Energy Information Administration. All indications are that the data will show builds less than last year and the five-year average. Last year a stout 108 Bcf was injected and the five-year average stands at 84 Bcf. Analysts at United ICAP calculate a build of 73 Bcf, and Ritterbusch and Associates is looking for an increase of 77 Bcf. Industry consultant Bentek Energy is looking for a 76 Bcf gain.
Technical analysts see market direction in the bullish camp. “Another constructive day for the bulls. But still no breakout,” said Brian LaRose, an analyst with United ICAP, following Tuesday’s close. “To open up room to $3.607-3.660, possibly even $3.806-3.950, $3.546 must first be exceeded. Until this can be accomplished, further consolidation near the highs cannot be dismissed.”
Another factor in the bulls’ favor is seasonal price cycles. LaRose points out that the seasonal price cycle for natural gas “point[s] up into late November, [and] we suspect it is just a matter of time before the bulls propel natgas higher.”
Other analysts using a slightly different approach see prices initially working lower before making any significant moves. Tom Saal of INTL FC Stone in Miami in his work with Market Profile calculated that November futures “would test [Tuesday’s] value area at $3.448-3.346 before moving on. November did trade as low as $3.431 and he also noted value areas at lower prices. Market Profile methodology also calculates weekly price targets should prices break out of the “initial balance.”
According to Saal, this week’s initial balance is between $3.515 and $3.327, and traders should definitely “go with the flow” once prices break out of the initial balance. The 50% weekly breakout target higher is at $3.609, and the 100% target is $3.703. The 50% weekly breakdown objective should prices fall below the initial balance is $3.233, and the 100% target is $3.139.
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