Other than a remote tropical wave that presumably could enter the Gulf of Mexico next week, there was little to explain price increases at all but one point Monday. Industrial load was returning from its usual weekend decline, but that hardly sufficed as a rationale for cash market gains despite flat futures on the previous Friday and only a modicum of cooling load outside the Pacific Northwest and the area from Texas through the desert Southwest and interior California.
A Florida citygate loss of a little more than 15 cents, after Florida Gas Transmission ended an Overage Alert Day over the weekend (see Transportation Notes), was the sole exception to overall gains ranging from a couple of pennies to about 35 cents. The Rockies tended to record most of the largest upticks.
Although it seemed a rather inconsequential market influence, some traders may have been wondering about a tropical wave that was about 200 miles east of the Windward Islands at the eastern end of the Caribbean Sea Monday morning, according to the National Hurricane Center. The agency gave the system less than a 30% chance of becoming a tropical cyclone for at least 48 hours.
The screen will have scant prior-day support for Tuesday’s cash market; after spending most of the day slightly in the red, August futures managed to eke out a small gain of 2 cents by the end of the day Monday (see related story).
Predicted Tuesday highs in Texas, while still hot in the mid 90s, represent a retreat from last week’s levels that were still reaching the low 100s. And other than temperatures that continue to hit the 110 area or so in parts of the desert Southwest along with mid 90s forecasts for inland California and sections of the Pacific Northwest, it was hard to identify major air conditioning load for Monday’s physical gas market.
A few parts of the South are still peaking around 90 degrees, but otherwise the low to mid 80s appeared to define the overall forecast for Tuesday’s high temperatures.
PG&E’s low-inventory OFO (see Transportation Notes) had only moderate impact on the Northern California market, where the PG&E citygate and Malin were up nearly 20 cents each.
“I don’t know,” a Gulf Coast trader frankly confessed when asked about Monday’s price strength in the face of overall weak weather-based load. She was gratified about again being able to sell her producer clients’ gas with no trouble, but she couldn’t pinpoint where the demand was coming from.
Maybe last week’s slightly below-expectations storage report indicated that production is slowing down, the trader said, or maybe some buyers are relying on positive economic predictions for the last half of the year. There are a few little things that may be adding up to a positive gas market currently, she added, but she still could see “no good reason” for Monday’s firmness.
She reported having no trouble selling her company’s supplies Monday. For right now the demand is still there, “but I don’t know if we’ll be able to say that in another month or two” in light of the storage situation, she said.
A Northeast marketer said he had just returned from vacation and thus had no good feel for Monday’s market, but he also was puzzled about why prices were up with little hot weather outside the Southwest.
A producer was somewhat incredulous in noting that Southern California border prices slightly exceeded those at Henry Hub Monday, asking rhetorically, “Can you recall the last time that happened?” Actually it occurred as recently as Dec. 16, 2008 trading for Dec. 17 flows, when the border average of $5.99 was nearly a quarter above the Hub’s $5.75. The producer was correct, though, in thinking that it’s been rare in recent years for Southern California border quotes to surpass those at Henry Hub.
The National Weather Service’s (NWS) six- to 10-day forecast for the July 20-24 workweek was moderately bearish, calling for below-normal temperatures in most of the eastern half of the U.S. (see Daily GPI, July 16). However, the update posted Monday afternoon was a little more bullish for the gas market, as it called for the below-normal readings to have receded into the Northeast and Midwest extending into parts of the upper South and as far west as the Dakotas, Nebraska, Kansas and Oklahoma during the July 26-30 period.
The number of drilling rigs seeking natural gas in the U.S. fell by seven to 665 during the week ending July 17, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). Its Gulf of Mexico tally was down two rigs, while five quit the search onshore. The most recent count was 4% less than a month earlier and down 57% from the year-ago level, Baker Hughes said.
Analysts at SunTrust Robinson Humphrey/the Gerdes Group noted that the latest Baker Hughes rig count report represented “a fresh low for this cycle and the fewest active gas rigs since May ’02.” The tally is now 59% below its peak last September, they said, adding that they anticipate it bottoming out in the vicinity of 650 rigs “over the next month and remain at roughly this level through year-end.”
©Copyright 2009Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |