Prices for gas for Monday delivery fell an average of just over a penny nationwide Friday. Buyers in the Midwest reported a quiet market with Monday gas at NNG Demarcation falling just over three cents and gas at the Chicago citygates dropping slightly less than two cents. West Coast gas for the weekend and Monday softened amid the highest recorded flows on the newly opened Ruby pipeline.
“We haven’t been buying much because we have quite a bit of gas coming at us and the weather is pretty mild. We haven’t been too active in the cash market,” said a Midwest buyer off Northern Pipeline.
“Prices have also come off since indexes were determined and that is a little bit of a deterrent, and we have quite a bit of storage we can use. We’ll use that before we start going out and buying. We are not trying to make a buck off our storage gas and just try to optimize what we have. If the weather turns and we can make a little money we’ll do that otherwise we are not in the market solely for profit.”
The buyer said his company didn’t have any insight as to winter weather and “we just have a certain baseload of gas that comes at us every day and we supplement that with storage, spot purchases, and LNG and propane for peak-shaving needs.
“I saw a weather forecast for highs in the 50s and lows in the 30s for this week so that is nothing too drastic,” he said.
Forecasts call for above- to much-above normal temperatures in the Northeast and cooler temperatures in California. Commodity Weather Group of Bethesda, MD, in its recent six- to 10-day forecast showed warm temperatures east and north of a broad arc extending from Virginia to Missouri to Minnesota. California and the desert Southwest were expected to be below normal, but the remainder of the U.S. was expected to be normal.
“[Last] week’s more reliable European ensembles are continuing to build and progress forward a warmer ridging pattern in the North Atlantic. This blocking setup works to help redirect more cold air into the U.S. over time as well,” said Matt Rogers, president of the firm. “While the models are in excellent agreement on building this Greenland block, they continue to vary on the pattern details in the North Pacific. This will determine how much cold still dumps into the West and how much digs toward Texas and the Southeast. Right now, the thinking is that cool-to-cold weather will rush under the block toward the Midwest and East but not dig as deep into the South yet. This weekend will be critical to watch for model consensus and consistency to build confidence.”
Gas buyers on the West Coast also reported a quiet market, but temperatures in California were posting cooler-than-normal lows, which has been causing somewhat higher loads. Monday gas at the PG&E Citygates shed just over a penny and deliveries to SoCal Citygates dropped a nickel.
“We expect to see cooler temperatures hang in here until Tuesday or Wednesday. We expect highs in the 70s and lows in the 50s, but when we get lows in the 30s, that’s a shock to us. We get temps like that in December and January,” said a California marketer.
“People will start thinking about using the heater a little bit more, and we just don’t expect that. After Wednesday we expect to see warmer temperatures and sort of a roller-coaster pattern through November.”
Forecaster Wunderground.com predicted California temperatures Tuesday would range from highs in the 30s and 40s in the Sierras and higher elevations to 60s along the coast and in the southwest desert. Low temperatures were anticipated to be in the teens at higher elevations to the high 30s and low 40s in the Central Valley and along the coast.
The marketer said volumes on the recently completed Ruby pipeline had reached their highest point since the line was completed in July. “Today, Ruby reached 1.2 Bcf/d, which is the greatest it’s been since inception,” the marketer said Friday.
Those flows are likely to have a significant impact on pricing. NGI indexes showed Opal tailgate prices at $3.54 and Malin at $3.66, but according to the marketer, once volumes start flowing in earnest, that differential should widen out with Malin falling relative to Opal tailgate.
“As people start to transport, I think you will see that spread widen out,” he said.
At the New York Mercantile Exchange price changes were even narrower. December futures rose five-tenths of a cent to $3.783, and January declined nine-tenths of a cent to $3.892. Volume was light to moderate (see related story).
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