Prices were softer at a large majority of points Monday due largely to the previous Friday’s dive of nearly 30 cents by October futures but also to a substantial drop of cooling load in the South and weather remaining moderate in most other areas.
A few scattered flat to 2-3 cents higher locations averted an across-the-board run of declines. Most of the market recorded dips ranging from 2-3 cents to about 20 cents, with most of the largest ones occurring at Rockies/Pacific Northwest points.
Despite a general dearth of weather-based demand, cash prices have a chance of achieving gains at some, possibly all, points Tuesday after the screen made up for Friday’s plunge with a spike of 33.7 cents Monday (see related story). One broker attributed the futures rebound to some traders starting to realize that last Friday’s sub-$3 settlement “is a steal.”
Much of the South from East Texas through the South Atlantic is unlikely to get above the low to mid 80s Tuesday, according to Weather Central, with only a few Florida locations reaching as high as 90. That allowed Southern Natural Gas to cancel an OFO while Florida Gas Transmission ended an OFO-like restriction (see Transportation Notes).
Except for some desert Southwest locations such as Phoenix continuing to reach the 100 area, moderation remained the watchword for the rest of North America’s weather outlook.
Referring to the Houston high dropping to the mid 80s Monday, a Lower Midwest utility buyer jokingly asked, “Have they started wearing jackets there yet?”
On a serious note, she noted that her own area is still in a very low-demand period for gas, with “bare-bones” type weather: essentially nothing in either cooling or heating load. Her company is still putting gas into storage and should have its accounts full by mid-October as scheduled, which will leave a little flexibility cushion of a couple of weeks or so before withdrawal season starts, she noted.
There’s unlikely to be any really cold weather in the Lower Midwest before October, the buyer continued. The regional long-range forecast says it should get a little cooler starting around Sept. 25 with overnight lows in the 40s, but she was not sure if that would be cold enough to get many local furnaces turned on.
SunTrust Robinson Humphrey/the Gerdes Group analysts noted that despite relatively benign weather so far this month, September gas-fired power generation is tracking 1 Bcf/d higher year-on-year as last year’s comparison was weakened by hurricane-related demand loss. “In terms of the tropics, storm activity remains fairly quiet as we tick past the peak of the hurricane season,” they said.
The remnants of Hurricane Fred were about 1,000 miles west of the northernmost Cape Verde Islands Monday, the National Hurricane Center said. Although the low-pressure area may produce intermittent showers and thunderstorms as it moves west-northwestward over the next couple of days, it is not expected to redevelop into a tropical storm.
After a little more than a month of small gains, the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/) noted a return to the general downward trend in 2009 of rigs quitting the U.S. search for natural gas during the week ending Sept. 11. The drop of two rigs to 699 (one addition in the Gulf of Mexico but down three onshore) was up 2% from a month ago but 56% less than the year-ago level, Baker Hughes said.
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