Nearly all of the cash market remained in a downhill slide Monday as mild to cool weather dominated the overall outlook, and cold conditions returning in a couple of regions proved unable to generate enough heating load at their associated pricing points. The restoration of industrial demand from its normal weekend hiatus had essentially no bullish impact.
Only flat quotes at Sumas and the PG&E citygate were left out of losses ranging from a couple of pennies to about 45 cents. The frequently volatile Northeast tended to record most of the largest dips, especially in the New England section.
December futures continued to provide negative signals to the next-day cash market by retreating another 12.6 cents (see related story).
With Tropical Storm Sean having passed from the scene during the weekend, the National Hurricane Center had no Atlantic tropical activity of any significance to report Monday.
Forecasts of colder temperatures later this week are most pronounced for the Midwest and Rockies; parts of both U.S. regions can expect to join Western Canada in experiencing subfreezing lows as early as Tuesday. However, mild to pleasantly cool forecasts are in place for the southern tier of states along with the southern West Coast, while moderately chilly but still seasonably mild conditions are in store for the Northeast.
Starting this weekend through the first half of next week, the National Weather Service expects above-normal temperatures everywhere east of a north-south line roughly paralleling the Front Range of the Rockies, with well-above-normal readings concentrated in the key gas-consuming areas of the Lower Midwest though the southern half of the Northeast. Below-normal temperatures are likely in nearly all of the rest of the U.S. At this time of year the above-normal eastern temperatures are definitively a bearish factor for the gas market.
Northern Natural Gas indicated the extent of the brief cold blast due in the Upper Midwest. Its bulletin board said Monday’s system-weighted temperature of 42 would drop below normal for this time of year to 32 Tuesday and further to 29 Wednesday before returning to 32 Thursday.
A Midwest utility buyer will see some subfreezing overnight lows in its service area during the next two to three days but didn’t find it necessary to buy any spot gas Monday. The utility should be able to easily meet its gas needs this week with storage and winter term contracts, she said.
The current bout of cold will not survive into the weekend, the buyer said, so the utility is “still waiting for serious winter weather” to come and stay for a while. Until then it’s a pretty bearish-looking market, she added, “although I don’t see how spot prices could get much lower” than they already are.
After reporting a whopping drop of 27 active gas-directed rigs in the U.S. in its previous report, the Baker Hughes Rotary Rig Count said an even bigger dive of 30 units to 877 occurred during the week ending Nov. 11. One rig was added offshore, Baker Hughes said, but the onshore tally declined by 31. Its latest count was 6% lower than a month ago and down 8% from previous-year levels.
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