Prices managed to eke out more mostly small gains Thursday in decidedly non-volatile trading as weather support continued to turn slightly more bullish. A few scattered points turned in essentially flat performances. Nearly all of the gains were in single digits, but they ranged to a little more than 20 cents in the Rockies, where some of the coldest U.S. temperatures — and even a bit of snow — currently reside.
Ranges tended to be unusually compact at most points and rarely exceeded a dime.
Thursday’s pleasant Northeast highs in the 70s will be replaced by 40s and 50s readings Friday as the first in a series of three cold fronts through Monday moves through the region, according to The Weather Channel (TWC) web site. Not much change is likely in the already chilly Midwest, where lows on either side of 40 degrees dominate the northern parts. The South also is expected to cool off going into the weekend, TWC said, but that will only cut back some developing air conditioning load for gas. Meanwhile, what it called a “vigorous” upper-level low in the Four Corners area will bring as much as three feet of snow to the Colorado and northern New Mexico Rockies and the Front Range into early Saturday. TWC predicts lower Rockies temperatures as much as 25 degrees below average.
A marketer said it was a “non-event day” when the Energy Information Administration estimated a 28 Bcf storage build for last week (see related story), which was in line with most previous expectations. The East region returned to net injection mode, chipping in 10 Bcf to the total, after having taken out 4 Bcf in the previous report.
After an initially bearish screen response to the storage report, natural gas futures eventually saw a gain of 4.1 cents on the day that was universally ascribed to great strength in Nymex’s nearby oil products trading pits. The government’s announcement that it would not change the rules on sulfur content in gasoline sent the unleaded gasoline futures contract soaring to its highest level ever, although it retreated a bit in the final settlement. Crude oil fell just shy of a dollar run-up to $36.70/bbl.
Global Insight senses a sizeable pickup in the injection pace this week. It is projecting a net build of 60 Bcf for the week ending April 23.
“Storage came out, but it didn’t really change anything,” the marketer said. “Everybody was expecting about that number.” She was hesitant to predict Friday’s market direction, saying the oil futures strength might offset the typical weekend-related drop in demand. There’s a good chance of the West being weaker, though, she continued, because many traders are expecting PG&E and/or SoCalGas to call high-linepack OFOs.
A Midwest trader saw pretty steady pricing thoughout the morning with little movement up or down, which accounted for the tight price ranges. It’s been a very quiet week with no transportation issues of any consequence, she said. Chicago is expecting pretty much the same cool but relatively mild weather for the weekend that it was experiencing Thursday.
Besides Rockies cold, some of the western market’s continued strength could be attributed to the restoration of injection capability Thursday at Questar’s Clay Basin storage facility. For about two weeks Clay Basin had been shut in for inventory verification (see Daily GPI, April 7), forcing storage customers to find an alternative home for their gas during that period. Also, an OFO by PG&E was lifted for Friday.
A Canadian producer said that instead of selling his gas at Sumas as he usually does, “I’m putting it into Alliance and taking it to Chicago instead.” He estimated there was about a dime greater profit at the wellhead that way. The producer reported doing a May baseload deal at Sumas for $4.85, which compares with NGI‘s $4.51 April index at the point.
A western marketer, also looking ahead, noted that Transwestern has maintenance scheduled May 10-14 in West Texas that will cut about 550 MMcf/d of capacity. “It’s hard to lock in baseload gas for the month when you know you’re going to get big cuts in transportation for five days,” she commented. A lot of plants in San Juan Basin have coordinated their maintenance in May to coincide with pipeline constraints, she added.
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