After rallying Wednesday because some areas would be turning colder by the weekend, prices seemed to be having second thoughts about the situation Thursday. The result was a cash market resembling the ones that ended last week and began this week: a mixture of moderately higher and lower numbers that was dominated by declines.
Points ranging from flat to up a nickel were primarily located in the Midcontinent/Midwest and West. The Gulf Coast had an occasional flat showing, but generally it and the Northeast/Appalachia market recorded drops of about a nickel to as much as 20 cents.
The West had some fundamental weather support to keep some points firm and minimize losses at others. Near-freezing temperatures accompanied by mountain-area snowfalls were spreading southward from the Pacific Northwest and northern Rockies. The Upper Plains region was experiencing similar conditions, and they were expected to be creeping toward the Midcontinent and Upper Midwest Friday and Saturday.
However, following some stormy episodes earlier in the week, the South is basking in mild to cool weather that was expected to continue until a cold front begins encroaching Sunday. As a utility buyer in Florida, until Thursday one of the last bastions of significant warmth, noted, a cool front had moved into the state and wiped out nearly all remaining air conditioning load. “We can leave our windows open now,” she exulted.
Similarly, the Northeast can expect a fairly pleasant weekend before a cold front moved across it and the Mid-Atlantic early next week.
For a Midcontinent marketer quoting Panhandle Eastern swing gas in the low to mid $4.10s, it was a “very, very slow market, as you can tell by our limited trading.”
Most cash traders would have considered the Energy Information Administration report of the season’s first overall net storage withdrawal (32 Bcf) to be bullish because it exceeded most prior expectations and took a bite out of the current inventory surplus over the five-year average. Denizens of the Nymex trading pits apparently thought so at first, sending the screen sharply higher for a brief period. But then the December contract retreated to an eventual loss of 12 cents on the day. One source suggested that despite some cold fronts due next week, the futures traders may have been swayed by the National Weather Service’s forecast that the eastern U.S. will still be seeing temperatures above normal for the end of November.
Bidweek was getting a little faster start than usual, largely attributable to the Thanksgiving holiday’s positioning in the late-November calendar. A lot of people want to be done with December deals before the weekend, said an East Coast utility buyer. It’s not necessarily because they already have Thanksgiving week vacations scheduled, she went on, “but Tuesday and Wednesday will be pretty hectic for swing trading.” (Deals will be done Tuesday for five-day flows to cover through the end of the month; Wednesday’s activity will almost exclusively be for Dec. 1-only supplies.)
Naturally there will still be December trading going on early next week by people armed with fresher weather forecast data. But a marketer commented that “it’s going to be rough” for those who like to wait until the Nymex settlement (due Tuesday afternoon) before doing next-month business. “Pretty much everything for December has to be finished Tuesday,” he said, because Wednesday essentially will be a half-day for nearly everyone and it will be dominated by trading swing gas for the first.
One trader indicated substantial index increases for December with these deals done Thursday (November indexes in parentheses): Waha around $4.30 ($4.11); Panhandle Eastern low to mid $4.50s ($4.23); and Transwestern Permian around $4.30 ($4.03).
A producer quoted basis deals at minus 3 cents for Tennessee Zone 0 and Texas Eastern’s South Texas pool, but said Florida Gas Transmission Zone 1 is running considerably weaker at minus 9-8 cents. He noted that “a lot of traditional Agua Dulce markets are selling around [Houston] Ship Channel flat, which is extremely strong” because Agua Dulce usually trades at a discount to the Ship Channel index. Ship Channel basis itself was really weak at around minus 14 cents, he said. “It’s getting pounded for some reason.”
Another source agreed that FGT Zone 1 basis was as weak as minus 8 cents but said she was hearing a range there up to minus 3 cents. The pipeline’s Zone 3 was definitely stronger with basis deals being done at plus 0.25-1.25 cents, she said.
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