NGI Archives | NGI All News Access
Overall Gains Continue, But Shrink at Most Points
The cash market continued to rise at most points Tuesday, but except for big rebounds in the Rockies, the new gains were quite a bit smaller than Monday’s. A few locations even showed moderate losses. The invasion of cold Canadian air into the U.S remained the chief instigator of further price increases, while an easing of excess supply issues in the West was responsible for larger upticks than those of the overall market.
Tuesday’s gains ranged from 2-3 cents to around 80 cents; outside the Rockies, they were limited to about a quarter or less. A couple points fell about a dime while a few others ended the day flat.
Much chillier weather was already arriving Tuesday in the Upper Midwest and Upper Plains and was expected to continue spreading into the rest of the Midwest, the Midcontinent, much of the South and eventually the Northeast over the next couple of days. Wind-driven snow will be a feature of Wednesday’s weather in sections of the Midwest, The Weather Channel said. Western temperatures will tend to be more moderate except for highs in the 30s in the northern Rockies.
The near-month futures contract, which had essentially neutral guidance for cash because of Monday’s bare 0.2-cent gain, was a little more supportive Tuesday — but not much. The November contract closed out 3.7 cents higher.
An oversupply of gas, which had resulted in major Rockies losses Monday while the rest of the market was much stronger, was being resolved to some degree. Questar’s Clay Basin storage facility, where injections had been limited to 50,000 Dth/d from Saturday through Tuesday, has an injection test scheduled Wednesday in which the volume will rise to 200,000 Dth/d (see Daily GPI, Oct. 9). PG&E is lifting a high-inventory OFO Wednesday, although it projected that system linepack would slightly exceed its maximum target level Thursday and then rise even higher Friday. And Kern River, which had reported high linepack systemwide Monday, said Tuesday linepack had returned to normal in its three (of four) farthest downstream segments.
As occasionally happens, especially large gains (or especially large losses, on the other hand) in a single day can create hypervolatility. NGI recorded dollar-plus trading ranges Tuesday at four Rockies points.
Don’t expect the colder weather to last very long in the Northeast, said a regional marketer. It might keep cash prices rising into the weekend, he said, but no big jumps are likely. After all, he pointed out, Tuesday’s upticks were a lot smaller than those on Monday and some points barely rose at all.
It feels colder now than before, the marketer went on, but it’s not all that cold yet. The Northeast currently is seeing fairly typical weather for mid-October, he said. Transportation is normal, he said, with no operational issues for the pipes.
Cash likely will keep going up Thursday, said a Calgary-based producer, but he doesn’t expect the same at Nymex. The Midwest market will stay cold through next week, so it has a better chance than others of keeping the current rally sustained beyond the weekend, he said. Overnight Calgary-area temperatures are getting down near freezing, he noted.
There still a very big convergence needed between cash prices and the screen by the end of the month, the producer said. Henry Hub closed a little of its deficit Tuesday but was still trading about $1.30 behind November futures, he said, adding that it’s a toss-up as to whether the Hub or the screen will do more of the movement necessary to get together in coming weeks.
On the same subject, one analyst thinks the screen will fall further than Henry Hub will rise, saying that’s limiting any upside for November futures (see futures story).
There will still be cold weather next week, according to the National Weather Service (NWS), but except for the Midwest it will largely have retreated into relatively sparsely populated sections of the U.S., so its gas price-boosting capability will be considerably reduced from this week. The NWS outlook for the Oct. 16-20 workweek calls for below normal temperatures in Washington state and northern Oregon, then ballooning southward to include the rest of the Pacific Northwest, the Rockies, most of New Mexico and North Texas, the Midcontinent, the Plains and all of the Midwest except eastern Ohio. The agency expects above normal readings in the coastal area of the Northeast from Maine through New Jersey: the southern end of the Florida peninsula; South Texas; and on either side of most of the California-Nevada border southeastward into the northeast corner of Arizona.
Although Gulf of Mexico production has experienced a quiet Atlantic hurricane season with no viable threats so far, now is not the time to get complacent, cautions Weather 2000. “Specifically, the Gulf and Caribbean have been mostly free of clouds over the last month, so this area bears watching throughout October as the waters continue to warm, especially now that [wind] shear will slacken in the coming days,” the consulting firm said in an advisory Tuesday. (Wind shear conditions in the eastern Atlantic are a primary reason that most of this year’s named storms have failed to approach North America and remained well out to sea.) “Although most activity this season has occurred on the Atlantic side, it is important not to write off the season for the Gulf, Caribbean, Bahamas and Gulf Stream (spurred by frontal boundaries),” Weather 2000 continued. “One only needs to remember 1995, which saw Hurricane Opal reach Category 4 in the Gulf in October after a relatively quiet June-September to boot.”
Commenting on the recent extended gas futures run-up, Phil Flynn of Alaron Energies commented Tuesday, “Natural gas is looking stronger and stronger every day. The market looks like it has responded to reports of firms cutting production, always a sign that a low for price[s] is in.”
Ron Denhardt of Strategic Energy & Economic Research expects a storage injection of 67 Bcf to be reported for the week ending Oct. 6.
©Copyright 2006Intelligence 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.
© 2024 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |