After a string of nearly all gains previously in the week, cash prices finally succumbed Friday to generally moderate weather-based demand and the previous day’s futures dip of 15.3 cents. Quotes were down at all points but one. The weekend decline of industrial load added to the general bearishness.
A flat Florida Gas Zone 1 was the sole location to avoid drops ranging from about a nickel to nearly C30 cents (Empress). The largest losses tended to cluster in the Northeast, where temperatures were due to rebound Saturday from a brief period of chill Friday.
Monday’s cash market will continue to have negative futures guidance after the November contract extended a fall into its third straight day with a decline of 16 cents (see related story).
Cooling trends Friday proved to be short-lived in the South and Northeast as much of both regions were due to rebound by about 10 degrees or so, although some temperature gains would be relatively modest.
However, mercury levels were expected to descending in the Midwest, with Chicago forecast to go from a high in the mid 50s Friday to the upper 40s Saturday, according to Weather Central.
Western Canada would remain fairly cold while the Rockies would get warmer in some sections and colder in others, the forecasting firm said. Overall moderate conditions were expected to prevail in most of the West.
Tennessee had signaled the weak Northeast market by announcing an OFO Action Alert to be implemented Saturday, and Texas Eastern seconded that motion Friday by barring any weekend imbalance makeup nominations that would add to its linepack.
PG&E kept a systemwide high-inventory in effect through at least Saturday, and Malin and PG&E citygate quotes were down about 20 cents and a quarter, respectively, in response.
A Midcontinent marketer marveled that Questar, historically one of the Rockies pipes seeing the lowest prices, had traded at parity with Henry Hub Thursday and was just below the hub Friday. In his own market area, basis has been unusually tight, he said.
He is expecting a relatively soft November bidweek market, citing signs of it in deals he’s seeing being quoted at index-minus. However, due to recent forecasts of a colder-than-normal winter, he said, “I like selling into this market.”
A marketer in the Upper Midwest said she was hoping local forecasts of weekend precipitation would turn out to be rain “rather than snow.” It’s cold enough in the region to keep her company buying spot gas, even though it hadn’t liked the price increases occurring through Thursday.
She said customers in Kentucky were expecting November basis of 40 cents or more for gas delivered by TGT. Her company was not doing any bidweek trading yet since it prefers to make deals on final-day futures settlement basis.
SunTrust Robinson Humphrey/the Gerdes Group made a preliminary estimate of a 40-50 storage injection for the week ending Oct. 23, which it said would be largely in line with the year-ago build and the five-year average.
The number of drilling rigs engaged in the U.S. search for natural gas continued an overall climb during the last couple of months in the week ending Oct. 23, going up by four to 725, according to the Baker Hughes Rotary Rig Count. One rig was deactivated in the Gulf of Mexico, but five were added onshore, Baker Hughes said.
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