Relatively cool weather in most of North America has yet to translate into substantive heating load increases; a tropical storm threat remains nonexistent and likely to stay that way through the final two months of the 2011 Atlantic season; and a screen drop of 8.1 cents Friday kept downward pressure on the cash market. The return of industrial load from its weekend decline provided weak market support.
A large majority of points recorded losses ranging from a couple of pennies to nearly 30 cents. A few scattered points were flat to 2 cents or so higher.
But the glaring exceptions to overall market dynamics were on Tennessee’s Line 300 in market-area Zones 5 and 6, which realized spikes of about 55 cents and 30 cents, respectively. That may have been partially in response to wet and chilly weather in the Northeast. However, Line 300 remained weak in Zone 4, where Marcellus Shale production has been competing to get aboard the packed pipeline for months. That point fell a little more than a quarter and still had a very weak low-end quote of $1.50.
Nymex will have further negative guidance for Tuesday’s cash trading after November futures dropped 4.9 cents (see related story).
After reaching Category Three (major) hurricane status Friday, Ophelia regressed over the weekend and was regarded as a post-tropical cyclone Monday as it moved to the east-northeast past Newfoundland. The National Hurricane Center (NHX) said it had posted its final advisory on Ophelia. Meanwhile, Tropical Storm Philippe continued to fluctuate in strength as it moved to the west-northwest from about 750 miles southeast of Bermuda. If continued long enough, such a tracking would take Philippe into the South Atlantic or Mid-Atlantic coast, but NHC expected a sharp curve back to the northeast starting around Wednesday morning, which would keep the system out in the open Atlantic.
Only the desert Southwest continues to have some unseasonably hot weather, and even there temperatures are about to fall a bit. Otherwise, highs are limited to the mid 80s from Texas through Florida, while peaks in the 60s and 70s dominate the weather outlook for the rest of the South and virtually all other market areas.
Northwest customers have limited options for their gas with the Jackson Prairie storage facility being shut in through Friday for an annual bottom hole test. The pipeline asked them to minimize banking and drafting due to north-end balancing capability being restricted.
Otherwise, there are few if any OFOs or other major pipeline constraints still in effect.
A western utility buyer said his area is about to experience a significant cooling period after regularly peaking in the 90s recently. Overnight temperatures could sink into the mid 60s later this week, he said, and even Phoenix is due for a “relative” cooling into the mid 90s Tuesday. Since the lower temperatures are just now arriving, he said, the utility has not yet seen a noticeable dropoff in gas load, but he wouldn’t be surprised to see it happen. Also, power generation load is holding up for now, he added, but that’s likely to fall as people in the utility’s service area begin to switch off air conditioners.
U.S. gas-directed drilling activity gained another 11 rigs in the week ending Sept. 30, bringing the total to 923, according to the Baker Hughes Rotary Rig Count. All of the additions occurred onshore, with the Gulf of Mexico seeing no change, Baker Hughes said. The latest tally is 3% higher than a month ago but 4% below the year-earlier level.
Canaccord Genuity analysts noted that current gas drilling is the most since December of last year.
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