The last day of summer saw lower prices at all but a few locations Thursday. Although the season doesn’t officially start until Friday, fall-like weather was already in place for many market areas. The previous day’s drop of 6.8 cents by October futures, restrictions to avoid packing pipeline (particularly those serving the Northeast), and further evidence that storage injection options are quickly fading added to the overall bearishness.
A large majority of points recorded drops ranging from 2-3 cents to nearly 40 cents, with most of the double-digit declines clustered in the Northeast. The stuffed-to-the-gills Line 300 in Tennessee’s Zone 4 continued to plumb new depths, with low-end quotes sinking to a dollar.
Despite Canadian weather being merely chilly for the most part, Western Canada experienced most of the modest strength with all three points up about a nickel. Flat quotes for Kern River delivery and the SoCal citygate, along with about a nickel gain by CenterPoint-South, also avoided the overall softness.
One source said market dynamics basically remain the same as they have been for weeks now: too much production chasing too little demand, and the ongoing choking off of available storage space just exacerbates the situation.
The Energy Information Administration’s report of an 89 Bcf storage build for the week ending Sept. 16 fell slightly short of consensus expectations in the low 90s Bcf. Still, Nymex traders had a modestly bearish response in pushing prompt-month futures 2.5 cents lower (see related story).
It was looking more and more as if Tropical Storm Ophelia would remain an Atlantic storm well off the East Coast as the National Hurricane Center projected a more north-northwesterly course as the system passes to the north of the Leeward Islands and Puerto Rico sometime this weekend.
NHC was still watching a weak low-pressure area near the northern end of the Leeward Islands Thursday morning, but it had disappeared from the agency web monitor that afternoon.
Except for hot temperatures remaining in Florida and in much of Texas through the desert Southwest, the overall weather outlook remains moderate to cool in most areas. Even several sections of Texas and inland California are cooling off to highs in the mid 80s or lower.
ExxonMobil has shut in 280 MMcf/d temporarily after finding a leak in a subsea pipeline that transports salt water produced from its offshore Mobile Bay operations to an onshore gas treating facility. Emphasizing that the leak was not in a natural gas line, spokesman Charlie Engelmann said the pipeline is buried under the sea floor with water depths of about 15 feet at the leak site. “The discoloration on the surface of the water is from sand, silt and salt water. It is naturally dissipating,” he said. The company was developing repair plans Thursday.
Bearish signals for the market continued to mount. Tennessee issued a systemwide Imbalance Warning effective Saturday to guard against excessive linepack (see Transportation Notes). Similarly, three Spectra Energy pipes — Texas Eastern, Algonquin and East Tennessee — cited forecasts of lower demand this weekend in saying they would begin encouraging customers to run negative imbalances starting Saturday.
And after Columbia Gas indicated that Critical Days limiting storage injections were likely to become more frequent for the rest of the traditional refill season through Oct. 31 (see Daily GPI, Sept. 22), CIG said it will declare a Strained Operating Condition due to little inventory capacity remaining in its storage fields (see Transportation Notes). In addition, Spectra’s Egan Hub (South Louisiana) and Moss Bluff (southeast Texas) storage facilities both said they anticipate the potential for high injection activity over the coming weeks and advised customers of the potential for restrictions on interruptible injections.
An Overage Alert Day by Florida Gas Transmission, which was in its third day Thursday, was a rare bullish pipeline constraint, but the Florida citygate and Florida Gas Zone 3 still fell by 8-10 cents or so.
Westcoast continued to report high linepack but said the problem was easing somewhat.
Much like the mantra for real estate agents is “location, location, location,” a Midcontinent producer succinctly summed up the prevailing gas market as “bearish, bearish, bearish.” There is almost no place for Midcontinent gas to go, he said, because the pipes are running full and there is little in the way of storage options left. Enogex’s Line 20 work early next month (see Transportation Notes) will only add to the takeaway problem for Oklahoma-based production, he added.
The producer said he is looking for some really major hassles on the supply side in October. He couldn’t see much letup on negative price pressures until winter cold arrives, and he noted that may be quite a ways off because the fall season is just beginning.
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