Prices strayed mostly short distances to either side of flat Thursday, with moderate gains tending to outweigh the losses despite sources contending that substantive heating load remains hard to find — for now. Most of the declines occurred in the West.
Many points were only a couple of pennies up or down from unchanged. The advances ranged as high as about 15 cents but a large majority were in single digits. Transco Station 30 and El Paso-San Juan (Bondad) fell a little more than a dime, but otherwise drops also were almost universally in single digits.
It came too late to impact the cash market except for late deals, but the Energy Information Administration’s report of an 88 Bcf storage withdrawal for the week ended Dec. 3 was deemed bullish even though it increased the year-on-year surplus when compared with the year-earlier draw of 111 Bcf. The volume exceeded prior expectations centered on the 70s Bcf range, but failed to stir the uproar that resulted from the report that came out just before Thanksgiving. January futures did jump more than 40 cents immediately following the report, but later retreated to a daily advance of 20.3 cents.
The primary differences between the two reports was that the one Thursday didn’t come out on a futures expiration day when Nymex trader ranks were thinner than usual due to the holiday proximity, thus exaggerating any screen movement due to lower liquidity; and also because Thursday’s figure wasn’t all that much higher than analysts’ estimates, whereas the Nov. 24 report stunned traders with its large margin above expectations.
A Northeast trader reported seeing “decent buying” in the market area even though area weather isn’t getting all that much colder yet. But the region can expect some significantly colder weather coming in around Tuesday that will bump heating load, and likely prices, higher, he said. He doesn’t think Wednesday’s screen rise of 6.2 cents had any meaningful effect on Thursday’s mild firmness in cash, but expects the Thursday futures jump of a little over 20 cents to have more of a cash impact Friday. The positive influences of the futures run-up and a moderately bullish storage report should just about cancel the negatives of lower weekend industrial demand and weak heating load, the trader said, so he looks for Friday’s prices to be mostly flat, at least in the East.
“Nope, there’s really no weather load” to speak of, said a marketer who reported Chicago citygates off by 2-3 cents. “Everything popped up after the storage report,” he said, but cash didn’t run as much as the screen because most of the deals for physical gas had already been done by that point. The marketer expects mildly higher prices Friday, largely because a cold front will be arriving in the Midwest before the weekend ends. He thinks cash-screen spreads will widen a bit in the next few days, but said that because of the futures strength shown Thursday, that doesn’t necessarily mean cash will be lower. He noted that Chicago citygates have been sitting about 60-70 cents back of the screen recently, but the gap widened to 80 cents-plus Thursday.
The National Service forecast for next week calls for below normal temperatures throughout most of the East, which in mid-December can mean some pretty frigid weather. However, “I’ll believe it when I see it,” the marketer said of the prediction for cold next week. He explained his attitude by noting that for the next three months the predictions “are always going to be weighted toward colder weather,” perhaps excessively so.
Sources have been reporting a quieter market mood this week, which likely could be in contrast to the brouhaha in the previous couple of weeks over the storage error and its subsequent revision. However, the storage revision issue is not fading away anytime soon, the marketer commented. “If it had just been a 5 Bcf error, that wouldn’t have been so bad. But just think,” he said. The 32 Bcf change that EIA made represented well over half of the bogus report’s total volume. He doesn’t blame end-users for being mad about paying a dollar more per Mcf for gas this month than they should.
Minerals Management Service said Hurricane Ivan-related shut-ins in the Gulf of Mexico had fallen to 594.29 MMcf/d Thursday, just under 5 MMcf/d less than the level it reported Monday. The cumulative tally of deferred production caused by Ivan from Sept. 11 through Thursday rose to 135.911 Bcf, or 3.054% of the Gulf’s annual production of about 4.45 Tcf, MMS said.
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