Unified price movement returned to the cash market Friday, and the direction was downward in a big way. Spot quotes bowed to relatively moderate late-summer weather trends in most areas (either existing or in the weekend forecast), prior-day futures weakness, the weekend drop of industrial load and new indications that little storage injection capacity remains with nearly two months left to go in the traditional injection season.
Losses ranged from about 30 cents to 85 cents or so. They were very consistent in nearly all cases across geographic market areas because only a few points fell more or less than 40-65 cents.
In another signal of potential looming storage woes, TGT and Questar became the latest pipelines to order the emptying of interruptible storage accounts (see Transportation Notes). ANR had done so late last month (see Daily GPI, Aug. 29), and Northwest required that Jackson Prairie interruptible accounts be reduced to zero by last Friday (see Daily GPI, Aug. 21).
It may not devastate week-starting Rockies prices quite as much as in the last two weeks, but a new constraint will be in effect Tuesday through Thursday as Northwest reduces capacity to zero at two stations (see Transportation Notes).
Friday’s biggest drop came at Florida Gas Zone 3, which continued to back off from early-week strength fed by market-area heat and a one-day Overage Alert Day by Florida Gas Transmission. Even with its plunge, Zone 3 continued to top Gulf Coast pricing by a wide margin. The Florida citygate fell about 75 cents.
A series of three cold fronts starting over the weekend is due to bring “cooler and cooler autumnal air” into the Midwest, The Weather Channel (TWC) said. Warm weather would remain in the South for a while longer, but few locations were predicted to get above 90 degrees Saturday. Then a strong cold front will cool off that region around midweek, TWC said. The Northeast was still a bit warmer than normal Friday but also would get the cold front treatment during the weekend, and temperatures were expected to be mild to cool in most of the West outside the desert Southwest, where some triple-digit thermometer readings were returning.
In a special advisory Friday morning, the National Hurricane Center (NHC) said a low-pressure area between Bermuda and the southeast U.S. coast had become better organized overnight and upper-level winds were becoming more favorable for additional development. “…a tropical depression could form later today [Friday],” NHC said. An Air Force Reserve hurricane hunter aircraft checked out the system Friday afternoon and reported that it had “not yet identified a well defined closed surface circulation,” so NHC had not made any depression designation as of NGI‘s Friday deadline.
Any threat to Gulf of Mexico production was highly unlikely due to the system’s projected westward or northwestward tracking toward the East Coast.
The Weather 2000 consulting firm said an official classification of the low-pressure area as Tropical Depression Seven or even Tropical Storm Gabrielle was “likely” Friday evening. It reminded clients that NHC has a “disproportionate tendency” to classify tropical storms (especially those near North America) either after 4 p.m. ET on weekday evenings or on weekends.
AccuWeather also said it believed a “tropical system” was forming despite NHC’s decision not to make a storm classification by late Friday. It likely would begin to impact the Carolinas over the weekend, AccuWeather said.
A Northeast marketer said hot weather would persist through Saturday in the region, but it would be “much cooler” starting Sunday. He saw little demand from power generators Friday and assumed they could “swing off their pipeline imbalances” without needing to buy any spot gas. He thought there might be some Saturday-only demand because the heat was forecast to still be around then, but didn’t find any.
No significant pipe maintenance is occurring right now, so transport is wide open, the marketer continued. Basis spreads from the Gulf Coast to the Northeast were in equilibrium for the weekend, which meant variable pipeline costs matched up well with the spreads, he said.
A Midcontinent producer said he didn’t see any weather patterns in the coming week that would definitively dictate either a new rally or continuing softness. Call it a toss-up, he said. Referring to the TGT and Questar announcements, he noted that new supplies from interruptible storage will be coming available through next month, which will put subtle negative pressure on the overall market over the intermediate term.
The number of drilling rigs targeted at finding gas in the United States fell by nine during the week ending Sept. 7, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). Most of the drop (eight) occurred onshore, Baker Hughes said, while its Gulf of Mexico tally was down one. The new total of 1,514 active gas-seeking rigs was 2% higher than a month ago and 7% above the year-earlier count.
Citigroup analyst Tim Evans is projecting storage additions of 50 Bcf and 73 Bcf for the weeks ending Sept. 7 and Sept. 14, respectively.
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