Thanks to a second straight day of futures strength Wednesday, cash prices were able to continue climbing at a majority of points Thursday. However, quotes tanked by triple-digit amounts in the Midcontinent and Rockies. Sources cited a common cause for the great price weakness in both regions: essentially no local weather-based demand at all.
Prices in the Gulf Coast, Northeast, Midwest and non-Rockies West were up from a little less than a dime to about C40 cents (Westcoast Station 2). The Midcontinent and Rockies losses ranged from a little less than $1.10 to a little more than $2.10.
CenterPoint-West took the biggest hit of all and traded as low as $1.25. But although CenterPoint-East averaged about half a dollar more than the West pool, it had even more of a lowball quote at $1.18. On the other hand, Northern Natural’s demarcation and Ventura points saw some of the biggest increases as cold weather remains in the forecast for its Upper Midwest market area.
The Energy Information Administration’s report of an 87 Bcf storage injection during the week ending Sept. 26 was near the top end of prior estimates and handily exceeded consensus expectations in the mid to upper 70s Bcf. The ability to achieve such a large build with more than half of normal Gulf of Mexico production still off-line clearly struck a bearish note with Nymex traders, who sent the November futures contract 24.7 cents lower to $7.481 (see related story).
From 62 operators’ reports it was estimated by the Minerals Management Service Thursday that 46.1% of gas production in the GOM is shut in out of normal production of 7.4 Bcf/d. It also is estimated that 55% of the oil production in the GOM is shut in out of normal production of 1.3 million b/d. As of 11:30 a.m. CDT Thursday, personnel are evacuated from 116 production platforms, equivalent to 16.7% of the 694 manned platforms in the GOM. Personnel from one rig are evacuated, equivalent to 0.9% of the 116 rigs operating in the GOM.
PG&E expanded a customer-specific low-inventory OFO Thursday into a systemwide one for Friday (see Transportation Notes), and the PG&E citygate and Malin rose more than 30 cents each in response.
Although the SoCal citygate averaged 8 cents less than the Southern California border in first-of-month indexes, the citygate is trading at what sources consider a more proper dime or so premium in the daily aftermarket.
“When you see prices drop like this, it means there’s just no weather load at all,” said a Rockies producer. Also, CIG’s storage facilities “are overflowing,” he said, noting that the pipeline had posted a list of actions it was taking to cope with the problem (see Transportation Notes). And there’s plenty of pipe capacity southbound out of Wyoming, but it’s not needed right now, he said.
There’s a good chance of major Rockies price weakness again next week when Questar’s Clay Basin storage facility is scheduled to shut down Oct. 8 for about a week, costing an estimated 350 MMcf/d of injection capacity, the producer continued. And Kern River will have a maintenance-related 200 MMcf/d capacity reduction just before then, he said, but that will last only for a couple of days. However, the forecast calls for snow in Denver next week, which may provide some price relief for the Rockies, he added.
In addition to neither cooling nor heating load in the Midcontinent, prices took a beating there also because of a lack of takeaway capacity with pipelines in the region running full or close to it, a marketer said. It was basically a case of too much gas chasing too little market, he added.
Thursday’s screen weakness provides negative guidance for Friday’s cash market, but colder weather moving into the Northeast and Midwest market areas may counteract that to some extent. A cold front was due to sweep southward into Iowa and the southern Great Lakes by Friday morning, The Weather Channel (TWC) said. Much of the Midwest will start Friday in the 40s, while morning lows will fall into the 20s across northern Minnesota, it added.
Another cold front will be moving into the Northeast, TWC said, taking Friday morning lows into the 40s and lower 50s. Even colder weather is due there during the weekend.
Other than high heat levels continuing in the desert Southwest, the rest of the West will range from moderate in California and the Rockies to chilly in the Pacific Northwest. And summer-like temperatures appear to have abandoned the South for the year, leaving behind mild to cool conditions.
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