The cash market finally succumbed to the realities of generally light weather-based demand and the further shrinkage of storage injection options by recording sizeable declines almost across the board Thursday. The November futures contract’s return to losing ways Wednesday following a scant one-day rally Tuesday was a further bearish influence.
Only a gain of about 15 cents by Line 300 in Tennessee’s Zone 4, where a recent Federal Energy Regulatory Commission approval of Tennessee’s activating a second phase of its Line 300 expansion promises an increase of takeaway capacity for Marcellus Shale gas fairly soon, avoided declines ranging from a little more than a nickel to about a quarter. Only one loss (Westcoast Station 2) was less than double digits.
Price drops were fairly consistent across geographic market areas, but the Southwest production basins tended to see most of the largest ones.
A report of a 97 Bcf storage addition during the week ending Sept. 30 by the Energy Information Administration fell slightly short of consensus expectations around 100 Bcf but was a bit higher than a few analysts’ estimates in the mid 90s Bcf. It also handily exceeded year-ago and five-year average volumes. Still, Nymex traders saw the report as nominally bullish and pushed November futures 2.8 cents higher in response (see related story).
Philippe is now a Category One hurricane but remains no threat to land. With its new north-northeastward movement, Philippe is unlikely to affect even Bermuda, much less the Atlantic Seaboard.
As many analysts had predicted, it’s been a very active Atlantic hurricane season, but only Tropical Storm Lee had any significant impact on Gulf of Mexico production, and that was largely shrugged off by the market. And of the 16 named storms that have developed, only five have advanced to hurricane status, according to the National Hurricane Center’s archives.
Although it did not get extended Friday, the Critical Day for storage declared for Thursday by Columbia Gas (TCO) was yet one more in a series of signals that injection capacity is getting tighter. A marketer noted that TCO’s Critical Day announcements had grown more frequent in the last two weeks or so and thought that was a factor in last week’s late softness that carried over through Monday.
And Northwest pointedly said the Jackson Prairie facility would become available again for withdrawals — but not injections — Friday (see Transportation Notes).
A somewhat premature winter snowstorm continues to rage in upper elevations of the Intermountain West, The Weather Channel said, but price impact essentially was imperceptible because of the thin population in such areas. The South has seen an overall warming trend recently, but with very few locations getting above the mid to high 80s, new cooling load is negligible. Meanwhile, seasonal early-fall weather continues to dominate in the Northeast and Midwest, where conditions mostly range from moderate to chilly.
A partial outage of Sable Offshore Energy Project output, the start of which was delayed from Wednesday to Friday, was labeled a nonevent for Northeast pricing by a regional marketer. Demand is mostly light at this time, so it was easy to work around the outage, he said.
It’s still too mild for the Northeast to see any significant heating load, he continued. Although prices were down substantially Thursday, he perceived trading activity as “pretty flat all around.”
A utility buyer in the South said his company saw a little jump in heating load at the start of the week when the low hit 41 briefly, but that’s gone now with bottom-end temperatures about 20 degrees higher. October is such a variable-load month in going from warm at first to colder in the last half, so he tended to buy baseload sparingly and use the daily market to handle fluctuations in demand. The utility is leaving a small gap open, he said, but keeping its storage accounts largely topped off.
Bentek Energy’s U.S. Natural Gas Hub Flows chart presaged to some extent the major price downturn. Only nine of the 23 trading points it covers had increases in nominated flows for Thursday, and they were generally small, with the largest being 76,000 MMBtu at TGT Zone SL, down 14%. On the other hand, four locations recorded fairly large declines: 264,000 MMBtu at Columbia Gas, down 9%; 230,000 MMBtu each at the Chicago and Florida citygates, 11% and 7%, respectively; and 104,000 MMBtu at the PG&E citygate, 4%.
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