The cash market closed out a surprisingly firm week in the face of weak fundamentals with mostly small gains at a majority of points Friday. Scattered instances of flat to mildly lower numbers were thrown into the mix; CenterPoint West stood out with a loss of nearly 15 cents. Upticks tended to be limited to single digits, although more than half a dozen points rose a dime or slightly more.
A marketer commented that once again it was difficult to fathom how prices could keep advancing with cold fronts in the weekend forecasts throughout the eastern market regions, but he thought gas traders might have been impressed by an early spike in September crude oil futures to the new all-time intraday high of $49.40/bbl. Most cash deals had been completed by the time crude retreated to an eventual daily loss of 84 cents to $47.86, he said. Also, the previous day’s natural gas screen rise of nearly 13 cents lent some support to weekend cash quotes, he said.
Actually, weather fundamentals will get a small shot in the arm as this week begins if last Tuesday’s National Weather Service (NWS) forecast was correct in predicting above normal temperatures in the Northeast and West Coast areas, the marketer pointed out. But in the Northeast’s case, the rise in thermometer levels will be fairly moderate and should not be enough to greatly raise gas load for power generation, he said. Besides, that modestly bullish factor should be canceled out by the NWS expectation of below normal temperatures throughout most of the middle half of the nation.
It’s a sure sign: when everybody is expecting prices to fall, count on them going up instead, joked a Calgary-based producer. He agreed that the fact that oil hit $49-plus while cash gas was still trading likely played a part in the overall mild firmness, even if oil later crashed to less than $48. He said crude futures weakened because the traders got some feeling that a military showdown in the Shiite Muslim holy city of Najaf, Iraq might be averted after all and allow the nation to increase production for exports. “But I wouldn’t rule out $50 crude in the future, though,” the producer went on, guessing that it probably would happen after the next major terrorist attack. He observed that the flat Chicago citygate “felt really weak in the mid $5.30s” while the screen was about 20 cents higher.
An intrastate Texas trader said the market was seeing no impact from the shutdown of the Moss Bluff storage facility northeast of Houston after an explosion and fire early Thursday morning (see related story). There might be some longer-range effect depending on how much supply was lost, but that’s not yet knowable, he said. Waha-Katy spreads got up to 30 cents Friday, making it very advantageous for those with the ability to move gas eastward across the state. He observed a price dip around the middle of trading followed by a recovery near the end, but said movement both times was small. Gas buying by the Texas electric utilities is still subnormal for August, he said, adding, “The Dallas area is rainy and not even getting up to 90 degrees today.”
In an indicator of how storage is filling quickly, Tennessee said that at the conclusion of Timely Cycle scheduling for Saturday’s gas day, it was required to restrict 100% of interruptible storage injections until inventory levels are reduced. In addition, Tennessee will not be offering Park agreements with withdrawals in future months until further notice.
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