Most of the cash market continued to see price increases Wednesday, although the gains were much smaller than those of the day before. A sharp pickup in tropical activity, highlighted by the formation of Tropical Storm Humberto off the Texas coast, and modest prior-day screen support were the main causes of further firmness, as cooling load remained light in most areas of North America.
A majority of points ranged from flat to about a quarter higher. Losses of up to about 15 cents were concentrated in the Midcontinent and Southwest basins.
The hemorrhaging stopped in the Rockies market, but the patient was still in critical condition despite rising averages. A 9-cent quote for Opal ensured that sub-dime lows would persist for a second day. In addition to the previously cited constraints on Rockies supplies, Questar added another when it issued an OFO notice saying it would accept no imbalance paybacks to itself Thursday until further notice due to high storage levels (see Transportation Notes). However, Cheyenne Hub led otherwise moderate Rockies upticks with a gain of nearly a quarter to average just shy of half a dollar.
Rockies producers will get some measure of relief Thursday, which is the last day of a Northwest maintenance project that has caused the shutdown of two compressor stations near the south end of the system.
In addition to Humberto (which had been Tropical Depression Nine), Tropical Depression Eight (TD8) formed in the Atlantic more than 1,000 miles east of the Lesser Antilles, and a third disturbance appeared about half-way between TD8 and Florida (see futures story).
Minerals Management Service did not report any offshore evacuations and/or shut-ins associated with Humberto. A staffer in the agency’s Lake Jackson, TX office south of Houston said the storm had formed so close to the Texas coast that it was unlikely any crew boats or helicopters were able to venture out into the Gulf of Mexico Wednesday, although he added that did not necessarily mean no evacuations had occurred. Production interests offshore southwest Louisiana may have had a small window of opportunity to get some personnel ashore, he said.
The tropical storm, with maximum sustained winds near 50 mph, was expected to make landfall on the upper Texas coast sometime Wednesday night.
A Houston-based marketer said he didn’t know of any, but “I would imagine there were some” evacuations of offshore workers. He noted that in after-hours trading October natural gas futures had inched up a bit further to $6.45 Wednesday afternoon, which was almost a guarantee of additional cash market firmness Thursday.
On another note, the marketer said he couldn’t understand why Rockies producers were still flowing gas if they couldn’t get more than a quarter or so for it.
Futures support for next-day cash trading got much stronger again as the October natural gas contract gained just over half a dollar Wednesday based on the increasing tropical activity and record-setting numbers in the nearby crude oil futures pit. Despite OPEC’s announcement of plans to increase production by 500,000 b/d, the early-week attack on Mexican pipelines continued to stoke the supply concerns of oil traders. October crude spiked to an all-time high settlement of $79.91/bbl after venturing into $80-plus territory briefly during the day.
An official of Mexico’s national oil company Petroleos Mexicanos told NGI that Monday’s pipeline explosions had interrupted flowing volumes of 1.2-1.4 Bcf/d, and the company was looking for a restoration date around Sunday or Monday (see futures story).
The National Weather Service’s (NWS) outlook for the Sept. 17-21 workweek calls for above-normal temperatures in a wide swath of the central U.S. stretching northeastward from eastern Arizona through the eastern Rocky Mountains and Midcontinent into the Upper Plains and Upper Midwest. Above-normal readings also are due in the northern two-thirds of Maine and a thin sliver along New York’s northern border, NWS said. It predicts below-normal temperatures along the South Atlantic coast from the southeastern corner of Virginia through nearly all of the Carolinas, Georgia and Florida. Below-normal conditions also are expected in all of Washington state along with most of Oregon (except for the southeast corner), most of Northern California and a coastal section of central California.
Ron Denhardt of Strategic Energy & Economic Research looks for a 68 Bcf injection to be reported for the week ending Sept. 7. A Reuters survey of 20 industry analysts found an average expectation of a 62 Bcf addition. The range of estimates was 45-78 Bcf, the news service said.
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