Still-moderate weather fundamentals for the most part didn’t seem to offer any rationale, but prices recovered some lost ground at all points Monday following an extremely weak weekend market. Without any new developments from previously mostly mild to cool weather, it seemed that at least a bit of “storm hype” must have crossed traders’ minds.
The previous Friday’s advance of 3.4 cents by November futures and the return of industrial load from its normal weekend holiday were minor factors in the cash rally.
Flat numbers at Dawn were the only exception to gains ranging from about a nickel to nearly 30 cents. Though none of the regions had more than chilly forecasts, the Northeast, Midcontinent and Midwest had the lion’s share of double-digit increases.
Friday’s modest support for next-day cash proved to be fleeting as the November contract reverted to softening in falling a nickel Monday (see related story).
Hurricane Otto exited the stage as it moved into the chilly waters of the North Atlantic during the weekend, but tropical activity appeared to be heating up to potentially one of its highest levels so far in this quiet (for Gulf of Mexico production) hurricane season. The National Hurricane Center gave near-100% odds to a system near the northeastern Honduras coast that was moving toward the northwest. Such a course could allow it to cross Mexico’s Yucatan Peninsula or even slip the gap between Yucatan and the west end of Cuba and enter the southeastern Gulf of Mexico.
No other significant tropical systems were active, NHC said.
PG&E and SoCalGas had gone into the weekend under high-linepack OFOs, but both ended them Sunday. IntercontinentalExchange (ICE) said Southern California border trading volumes on its platform rose from 370,300 MMBtu during the weekend to 416,500 MMBtu for Tuesday flows, while comparable numbers at the PG&E citygate were 895,500 MMBtu down to 801,000 MMBtu, respectively.
ICE found its Henry Hub deals jumping from a weekend level of 851,800 MMBtu to 973,000 MMBtu Monday while the price there rose a little more than a nickel.
One source said “storm hype” was the only reason he could see for Monday’s cash firmness. Temperatures certainly didn’t seem to be a compelling reason as highs are expected to be limited to the mid 80s Tuesday nearly everywhere except Phoenix and inland California to a lesser extent. Peaks in the 60s and 70s will be much more common in most market areas, he said.
But another industry observer wondered if people might still “be finding nooks and crannies in which to stash storage” gas and are rushing to do so with the end of the traditional injection season, which once seemed so far away, now within three weeks.
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