The swing market obviously had more resilience than some traders had expected because Tuesday’s prices ranged from up as much as about 15 cents to down more than a dime, defying predictions on Monday of overall softening.
In predicting lower prices Tuesday, sources had primarily cited the screen dive of 35.3 cents on Monday along with forecasts that significantly colder weather in the East wouldn’t be arriving until around the beginning of the Thanksgiving holiday weekend or later. A cold front along with a lot more precipitation are due in the already soggy South Wednesday, but the front is not expected to take lows below the 40s in limited sections of the region. Meanwhile, temperatures will remain fairly seasonal and uninspiring to heating seasonal for a little while longer in the Northeast and Midwest, although the Midwest could get some slushy snow from central Missouri into southern Michigan as early as Wednesday, according to The Weather Channel.
There were softer exceptions, but most western points continued to rise as cold weather still dominates much of the region. Kern River exemplified the western heating load with a rare report of low linepack in all four of its segments Tuesday. And cooler than normal temperatures in Southern California again supported prices at the state border, which again topped all gainers.
Negative price signs in the West, however, included a high-inventory OFO by PG&E (see Transportation Notes), sending citygates down more than a dime in contrast to the border strength, and a report that the 1,080 MW San Onofre 2 nuclear reactor was back to nearly half-power Tuesday morning after tripping offline Friday and was expected to be back at full output sometime Wednesday. However, the same-sized San Onofre 3 unit remains offline after starting a refueling outage in late September and is not expected to be back on the grid until early January.
The tremendous weakness of the entire November aftermarket was reflected in the fact that even with Monday’s big rebounds and mixed numbers Tuesday, with few exceptions nearly all points were around $1.50 or more below first-of-month NGI indexes. Indeed, a clear majority of deficits exceeded $2.
A marketer reported seeing pretty good demand at the Chicago citygate, but said it was “more anticipatory” of colder weather later in the week rather than for current burns. He noted that the Waha/Katy-Houston Ship Channel spreads had tightened greatly over the past two days to the point of disappearing Tuesday with Waha quotes averaging slightly above the other two points, sending more Waha gas west and heavily discouraging eastward transport across Texas. The marketer expects the overall price downtrend to resume Wednesday, saying he thinks the demand slump over a longer-than-usual holiday weekend will outweigh the colder weather expected as the weekend ends.
The National Weather Service says to expect below normal temperatures during the Nov. 29-Dec. 3 workweek everywhere west of a line running from central Michigan to the western border of Louisiana, except for a patch of above normal readings in the northwestern corner of Washington state and normal conditions in the rest of Washington and northern Oregon. It also predicted above normal temperatures along a narrow strip of the East Coast from southern Maine through southern Virginia, where the above normal prediction widens out to include most of the Carolinas and Georgia, all of Florida and southeastern Alabama.
A West/Midcontinent trader saw little change from Monday in bidweek pricing, quoting December deals done Tuesday for Waha on either side of $6.10; Transwestern Permian around $6.00; Panhandle Eastern in the mid to high $6.20s; and Northern Natural-demarc in the low $6.40s. She echoed another sources declaration that December gas is a very tough sale so far. “A lot of people seem to be already on holiday vacation mentally if not physically,” she joked.
A utility buyer in the Lower Midwest reinforced the “tough sale” perception, saying he was not buying any December baseload. His company is already covered for normal December needs under winter term deals, “and we can always go out in the daily market” if necessary, he said. Although he was eschewing bidweek trading, the buyer reported hearing basis of minus 40-38 cents for demarc. His region has gotten back to “normal temperatures” this week (that is, chilly at night but not overly cold), but should start seeing colder weather by Sunday, he added.
A marketer quoted Chicago basis Tuesday afternoon at plus 17-22.5 cents, up from plus 16 cents earlier. That would equal close to $7 in fixed pricing, he observed.
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