November Nymex natural gas futures swung in a 15-cent range Thursday before ultimately finishing the day exactly where they started. After government data showed an on-target storage report, the prompt month went on to settle Thursday flat at $2.527. December, however, fell 5.5 cents to $3.062.
The stability at the front of the Nymex curve came despite continued weakness in the cash market, where NGI’s Spot Gas National Avg. fell 21.5 cents to $1.310.
After weeks of erratic price behavior, November futures settling the day unchanged may be a bit surprising to market observers. That could be because traders were still trying to digest the latest Energy Information Administration (EIA) storage report. The EIA recorded a 76 Bcf injection into inventories for the week ending Sept. 25, which was within the range of estimates ahead of the report.
The 76 Bcf build was considered by analysts to be rather tight from a supply/demand perspective. It compared with a 109 Bcf injection for the similar week last year and the five-year average build of 78 Bcf.
However, traders’ struggle to determine where to send November prices from here may stem from the stark reality that inventories still are at risk of exceeding capacity before withdrawals begin. In particular, stocks continue to swell at salt facilities in the South Central region and are nearing capacity.
“Nationally, we are on pace to have enough room, but need to alleviate the surplus especially in salts,” Bespoke said.
South Central inventories rose by 21 Bcf, including a 9 Bcf injection into salt facilities and an 11 Bcf build in nonsalts, according to EIA. Salt capacity is reported to be around 400 Bcf, with four more weeks remaining in the traditional injection season. Builds often continue into November.
Elsewhere across the Lower 48, the Midwest added 24 Bcf into storage, and the East added 21 Bcf, EIA said. Mountain inventories climbed 6 Bcf, and the Pacific rose 4 Bcf.
Total working gas in storage as of Sept. 25 stood at 3,756 Bcf, 471 Bcf above year-ago levels and 405 Bcf above the five-year average, according to EIA.
NatGasWeather said the EIA report provided “little drama” and was on par with expectations, but liquefied natural gas (LNG) feed gas deliveries were higher day/day and production was lower. This tightening of the balance may have provided some support to prices.
However, the forecaster cautioned that Thursday was the first day of the month, and revisions to Lower 48 output are likely.
“We expect volatile trade to continue Friday as players evaluate risk ahead of the weekend and where there’s potential for LNG feed gas to increase further, but also with a new tropical cyclone spinning up in the Gulf of Mexico,” NatGasWeather said.
In a 3 p.m. ET update, the National Hurricane Center (NHC) said a well defined tropical wave over the western Caribbean Sea was producing an area of disorganized showers and thunderstorms. Conditions were expected to be conducive for a tropical depression to form by early next week, “but only if the system moves and remains over the waters of the northwestern Caribbean Sea or southern Gulf of Mexico,” according to the NHC. “Development will become less likely if the system moves over the Yucatan Peninsula or northern Central America.”
Another tropical wave east of the Lesser Antilles also was producing an area of disorganized showers and thunderstorms. The wave was forecast by the NHC to move westward during the next several days. Environmental conditions could become more conducive for development when the system is over the central or western Caribbean Sea early next week.
Nearing Zero Again
Cash prices across the Lower 48 remained weak on Thursday with little in the way of widespread cold or heat to move the demand needle nationally. Meanwhile, Chamber of Commerce weather in Texas and some other downstream markets largely outweighed any impacts from pipeline maintenance in the Permian Basin.
El Paso Natural Gas Pipeline’s October maintenance calendar showed remediation taking place through Oct. 26 from the Hackberry compressor station to MLV 47. The work is expected to result in a 536,200 Dth/d reduction in capacity and is on top of several smaller maintenance events that also slightly lower capacity along the pipeline.
The restrictions, however, had no bearing on cash. El Paso-Permian next-day gas fell 37.5 cents to average only 38.5 cents. Some traders were as low as 5.0 cents.
Spot gas prices at other Texas markets were down more than 20 cents day/day.
Losses also were steep in the Northeast despite an approaching cold front. NatGasWeather said an early-season weather system with chilly conditions was to sweep across the Great Lakes and Northeast the next several days. Overnight lows were forecast to drop into the 30s and 40s, locally 20s, for a bump in national demand.
Cash markets were unfazed. Transco Zone 6 NY plunged 45.5 cents to average only 49.5 cents for Friday’s gas day. The highest transaction was valued at only 65.0 cents.
In New England, the typically high-priced Algonquin Citygate was down 30.5 cents to average 82.0 cents.
Algonquin Gas Transmission (AGT) was set to bring fully online the 132 MMcf/d Atlantic Bridge pipeline on Thursday after receiving federal approval in September for the final portion to go online. However, an unspecified incident on Wednesday triggered the Weymouth Compressor Station’s automatic shutdown system and resulted in an unplanned release of at least 10,000 cubic feet into the area.
AGT subsequently issued a force majeure at the compressor on Thursday, with a notice indicating an end date of Dec. 20. Although eastbound capacity through the station was to be at zero during the force majeure, AGT said efforts were being made to enable full capacity.
Genscape Inc. noted that heavy permitting delays led to Atlantic Bridge facilities being phased online, with the Connecticut portion online in November 2017 for 40 MMcf/d and the New York portion online for 92 MMcf/d in November 2019. The remaining facilities consisting of the Weymouth compressor and modifications at the Westbrook M&R would not add incremental capacity, but would allow utilization of the full project path north of Beverly onto Maritimes.
Last month, a gasket failure caused a similar shutdown and gas venting.
In California, meanwhile, continued heat prompted the state’s electric grid operator to call for energy conservation to ensure power supply. Temperatures were forecast to reach the upper 90s to low 100s across the interior and throughout much of the intermediate and inland Bay Area with upper 80s to low 90s near the coast.Gas prices, however, continued to tumble. SoCal Citygate spot gas dropped 70.5 cents to $3.490.
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