All cash points retreated Wednesday within a range of about anickel to 20 cents, with most declines occupying the middle groundat 8-15 cents. Sources attributed the softening to the screen’sweakness a day earlier, a general dearth of cooling load, anddoubts about production risks from downgraded Tropical Storm Debby.
Prices in the Southwest basins were only moderately lower, buttraders expected them to keep falling today based on prospects that ElPaso might have been able to restore part of its South Mainline toservice Wednesday night or today. However, the pipeline’s hopes inthat respect were dashed late Wednesday afternoon when the Office ofPipeline Safety said all three lines taken out of service after lastSaturday’s explosion must stay closed until extensive tests can ensuresafe operation (see related report, thisissue).
“This is certainly significant considering we were told aportion of that gas [constrained by the explosion outage] would beavailable as early as [Thursday],” said a marketer upon hearing thenews. “Right now Ehrenberg deliveries [Southern California border]are down to 500-700 MMcf/d from the usual 1.1-1.2 Bcf/d. It ispretty safe to say that prices will stay strong in California.Plus, with the gas not being transported to the West, it will beflooded back into the Keystone pool. The other thing that haspeople concerned is the low level of SoCal Gas storage inventories.Because of the intense heat and high power prices, the summerinjection period has been all but lost…Now this? Border basis forSeptember last week, before the explosion, was trading in the[plus] 80s and yesterday was trading at [plus] 113-115. I wouldn’tbe surprised if basis shot up by another 10 or 20 cents[Thursday].”
It was not a good day for being the adventuresome type, agreedseveral traders who indexed many or all of their deals. “We justweren’t comfortable trying to do fixed prices with the marketseesawing 20 cents or more each day,” said a Northeast-orientedmarketer. Except for Tennessee Zone 6, Northeast citygates and theAppalachian pipes recorded many of the drops of around 15 cents ormore as cool regional weather again refused to offer any clue thatit’s summertime.
After a brush with the mountainous parts of Hispaniola (Haitiand the Dominican Republic), Debby weakened into tropical stormstatus. It was expected to regain hurricane strength if it movedback out over warm Caribbean waters, but to keep weakening if itwent ashore.
To one marketer, it seemed like Nymex “believes in the hurricaneone day [Monday], loses faith the next day [Tuesday], and thenbecomes ‘born again’ the next day [Wednesday].” However, othertraders thought Wednesday’s early run-up in the September futurescontract (up more than a quarter to $4.79 at its peak) was duemostly to expectations of a bullish storage report. However, whenAGA finally said 55 Bcf got injected last week, the screen settledback to a gain of only 8.5 cents on the day.
A Houston-based source said his electric generation load was waydown. “Several utilities all wanted less gas from me than usualbecause of Texas weather getting a bit milder,” he said.
September activity is still minuscule, but one trader reportedhearing Chicago citygate offers both at the GPI index flat to down0.25 and at the last-day Nymex settlement plus 6. A westernmarketer said El Paso-Permian basis appears to be getting back tonormal after going mildly to the plus side for August. Septemberbasis was around minus 18 last week, but tightened to minus 7 atthe beginning of this week when Tropical Storm Debby’s threat toGulf of Mexico wells was uncertain, then slipped back to minus 16Wednesday, she said. (This was before the news came out that ElPaso’s outage likely will last quite a while longer. Permian basisnow is expected to weaken drastically today.)
©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |