The bullish effect of a smidgen of extra cooling load and a rare boost from prior-day futures proved to have short effect in raising cash prices. After gains at virtually all points on Monday, flat to slightly higher numbers remained in a moderate majority Tuesday but were being infiltrated by several small losses.
Only one of the scattered losses ranging from 2-3 cents to about a dime managed to get out of single digits. A sizeable majority of locations were flat to a little more than a nickel.
Wednesday’s cash trading will still have a small amount of prior-day screen support, but it will be smaller than before as Nymex’s November contract tacked on another 2.8 cents Tuesday (see related story).
Paula barely qualified as a Category 1 hurricane (with sustained maximum winds of 75 mph) overnight Monday. While pushing on a north-northwestward course from offshore northeast Honduras along the eastern Yucatan Peninsula during the day Tuesday, Paula was expected to turn more northward Tuesday night by the National Hurricane Center. At least a couple of analysts indicated that models show the system turning farther eastward into western Cuba and avoiding the eastern Gulf of Mexico, although there could still be some precautionary evacuations of nonessential personnel there.
Southern temperatures that had been reaching the mid 80s and occasionally upper 90s Tuesday will be hard-pressed to exceed the 80 area Wednesday. Only the desert Southwest and inland California had any other appreciable heat; most other areas were chilling out at peaks in the low 70s or lower.
A Midcontinent producer said his company was having difficulty making sales this week because nobody wanted gas for either heating or cooling. Unless a supplier has available storage injection space remaining open, “you sell gas at a loss” for as long as necessary, he said. Although Hurricane Paula appeared to have one of the best chances of the year in breaking into offshore production, the producer said he was unaware of any “storm hype” in boosting prices either Monday or Tuesday.
There were no blizzards or heat waves in the forecast, he continued, so he had to assume that mild softness would continue to dominate the market for a while longer.
Appropriately for a Monday trading day in which virtually all prices rose, Bentek Energy’s U.S. Natural Gas Hub Flows chart found only seven of the 23 trading points it covers failing to range from flat to as much as 19% higher in nominated Tuesday flow volumes. The PG&E citygate took the biggest volumetric hit of 310,000 MMBtu, or 11%, while gains topped out at 252,000 MMBtu, or 10%, into Columbia Gas in Appalachia, Bentek said (Waha had a slightly larger percentage increase of 12%, but that was on volume of only 106,000 MMBtu).
Stephen Smith of Stephen Smith Energy Associates said Tuesday his latest projection of a 92 Bcf storage build for the week ending Oct. 8 is up slightly from a previous estimate. Strategic Energy & Economic Research analyst also is looking for a 92 Bcf addition.
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