The cash market recorded a mix of gains and losses Tuesday, but bulls were slightly in the ascendancy as flat to higher numbers tended to be both more numerous and have larger increases than the falling ones, all of which were in single digits.
Although severe cold was scarce outside Western Canada and parts of the Rockies along with sections of the U.S. next to the Canadian border, residents of the Midwest and Upper Plains could expect overnight lows that likely would spur heater use. And although the most southerly states had at least one or two more days of mild conditions in their forecasts, chilly temperatures are expected to extend into the upper South.
A moderate majority of trading locations was flat to up about a quarter, with dime-plus gains concentrated at the three Western Canada points. All of the scattered declines were small in ranging from 2-3 cents to about a nickel.
Nymex traders continued to send negative prior-day signals to the cash market by driving prompt-month futures 5.4 cents lower Tuesday (see Transportation Notes).
The Chicago citygate, which has a low slightly below freezing in its Wednesday forecast, saw volumes traded on IntercontinentalExchange jump from 812,800 MMBtu Monday to 1,141,100 MMBtu Tuesday while the average price rose about a nickel.
Noting that CIG and Henry Hub had returned to essential basis parity in the low $3.10s, a Rockies producer acknowledged that heating load was quite a bit stronger in his region than along the Gulf Coast. Possibly more important, though, was there no longer being any lack of Rockies takeaway capacity, which in previous years had been a major factor in keeping Rockies pricing near the bottom of the overall market, he said.
However, the producer continued, the market overall is still very weak, and that results from a combination of relatively little weather demand and almost no storage injection space remaining available.
A utility buyer in the South said his area had gotten just chilly enough lately to spur the company into buying “very little spot” gas and using a small amount of storage. The utility is still where it wants to be positioned on storage at this time, he said, and it would take much colder weather than this for it to dip into storage more heavily.
Three analysts had remarkably similar estimates of the storage injection to be reported for the week ending Nov. 11. Stephen Smith of Stephen Smith Energy Associates and Stefan Revielle of Credit Suisse both weighed in with expectations of 23 Bcf, while Kyle Cooper of IAF Advisors came in barely higher in anticipating a 24 Bcf build.
Citi Futures Perspective’s Tim Evans came in significantly higher with a call of a 32 Bcf injection, to be followed by further additions of 37 Bcf and 17 Bcf for the weeks ending Nov. 18 and Nov. 25, respectively. Evans expects the season’s first weekly net withdrawal — 27 Bcf — to occur during the week ending Dec. 2.
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