A modest warming trend in the Midwest and significant heat levels across most of the southern half of the U.S. kept prices rising Wednesday in most of the cash market. However, bullishness appeared to be receding further as a majority of points were flat to less than a dime higher and the instances of softer numbers increased.
Flat to as much as about 90 cents higher quotes dominated Wednesday’s trading. However, the spike at the Florida citygate after Florida Gas Transmission issued an Overage Alert Day (see Transportation Notes) was something of an anomaly because the next highest gain was around half a dollar. The greatest price strength was concentrated at western and Florida-oriented points.
Losses ranged from a little less than a nickel to nearly 20 cents. Northeast citygates saw most of the softness as the lack of cooling load in a mild to chilly market area finally began to weigh more on regional pricing.
After receiving scant prior-day screen support from Tuesday’s 1.9-cent uptick by July futures, the cash market will have much more substantive positive guidance after the prompt-month contract added another 25.8 cents Wednesday amid major strength throughout Nymex’s energy complex (see related story). That likely will keep most, if not all, cash points climbing Thursday, one source said.
There was some industry buzz about a tropical wave moving westward in the mid-Atlantic. However, the National Hurricane Center said the wave, which was about 800 miles east of the Windward Islands (the southern half of the Lesser Antilles chain between Puerto Rico and Venezuela) early Wednesday afternoon, would encounter conditions that “are not conducive for development of this system.”
Westcoast Station 2, Sumas and Northwest-domestic all saw strong gains after Northwest Pipeline declared an OFO due to excess nominations through Meacham Compressor Station. However, despite hot weather continuing in the desert Southwest and inland California, the Southwest basins were relatively weak after El Paso ended a Strained Operating Condition caused by drafting of its system and instead warned that linepack had built to undesirable levels (see Transportation Notes).
Although Cheyenne Hub was flat, other Rockies points were boosted by localized cooling load. Although it represented a slight cooling trend, Denver was expected to peak in the mid 80s Thursday.
“Who knows?” a Gulf Coast producer replied when asked why most prices continue to rise despite modest cooling load in northern market areas. Actually, it’s still pretty hot across the southern U.S., he pointed out. “Northern market areas may think they control prices,” he said, but during the summer the spot market is more dependent on southern heat, implying that northern markets just contribute some extra load when heat waves occur there. And there are so many other variables in the market, one cool area may not have that impact, he added.
The producer also suggested that expectations of another low storage injection figure Thursday could be a factor in keeping cash traders mostly bullish. He thought Wednesday’s screen spike “very well could” keep spot prices climbing Thursday.
A Calgary-based producer said his company was moving a lot of gas to Northern California because of the heat in the interior part of the state. Most Canadian suppliers are dropping off their gas at Malin, and presumably the buyer could take it to the Southern California market if it had the necessary transport capacity.
It’s still pretty chilly in Western Canada, the producer continued, but should be warming up in the near future. At this point the region has neither significant heating or cooling load, he said.
Nymex has been providing “some good support” for the cash market lately, but western basis has been closing in gradually on prompt-month futures this week, he said.
©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |