Much like on the previous Friday, the market was mixed again Monday, but this time the tendency toward softening was more pronounced than before. And a swan dive by the screen, which was just a tad shy of losing 35 cents, pretty much assured that mild weather forecasts would continue to exact a toll on cash numbers Tuesday, sources said.
Western numbers tended to hold up most firmly, ranging from flat to about a dime higher. Quotes in the East, on the other hand, went from barely lower to down as much as 30 cents, although few losses exceeded 20 cents.
“We’ve got ourselves some strength out West,” remarked one trader. “It’s still a little cool out here, so folks are buying gas. If you look at a $4.35 [near low end of Southern California border range] and you have December [futures] trading at $4.76, that’s a good spread.” However, he went on, “Our extended weather looks above average. Plus we have nearly full storage. Prices might not be getting too much more expensive this year.”
“We definitely should see lower cash again” Tuesday after that huge Nymex drop, said a Midwest utility buyer. Except for some cold and occasionally snowy areas from the lower Rockies through the Upper Plains, there’s little weather support of any kind for gas numbers, he commented. “It may be 70 degrees around here Thursday, and we’ll likely be trying to sell gas then along with everyone else.”
Waha was one of the rare western points to record a small loss Monday as it found markets hard to find in intrastate Texas and the Midcontinent/Midwest.
The National Weather Service sees virtually nothing in below normal temperatures this week until near the weekend, when it expects some below normal readings to start showing up in parts of the West.
Citigroup analyst Kyle Cooper expects this week’s Energy Information Administration storage report to feature the first withdrawal of the season, saying he looks for an inventory reduction of 15-25 Bcf. That would compare bearishly with year-ago and five-year average draws of “just 1 Bcf” and 18 Bcf respectively. Cooper also noted that with the mild weather forecast for this week, another net injection in next week’s report “is not out of the question.”
Houston and Dallas were among the parts of Texas brutalized by violent weather Monday that spawned tornadoes and caused heavy street flooding and power outages. At least two Houston marketing firms contacted by NGI sent employees home early because of the flooding.
The only energy-related company known to have suffered from the storm was Baker Petrolite, a division of Baker Hughes. Baker Petrolite’s corporate headquarters “sustained heavy damage” Monday when a tornado and heavy rains struck the Sugar Land, TX, area southwest of Houston. Nobody was seriously injured. Baker Petrolite, which makes specialty chemical products for the oil and gas industry, lost computers and parts of its roof, and had windows shattered, said one company employee. “People were diving under their desks. I went straight under my desk,” he noted. The windows of employee vehicles were blown out, and semi-trucks were overturned in the area.
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