The cash market finally bowed — but not totally — to the reality of weak weather fundamentals and the steadily diminishing possibility of Tropical Storm Florence even reaching North America, much less the Gulf of Mexico. Although a majority of points recorded moderate losses Thursday, there were still quite a few that were flat to a dime higher.
A small prior-day screen decline of 4.5 cents contributed to negative guidance for other cash quotes that fell from 2-3 cents to about 40 cents. Most of the softness was concentrated in the Louisiana section of the Gulf Coast, the Rockies and California. The Midcontinent was unique in seeing flat to higher numbers at all regional points despite mild weather continuing Friday in its primary Midwest market area and a Canadian cold front approaching to further decrease any remaining cooling load in the Midwest.
It’s likely that all points will be united in softening Friday, considering the screen fell more than a quarter Thursday, mild late-summer weather will remain the norm outside the desert Southwest, and prices will be subject to the lighter industrial load associated with a weekend.
The Northeast is in a warming trend, but the gas demand effects are negligible with area highs not due to rise above the low to mid 80s Friday. Besides, a cold front will start taking thermometer levels lower again Saturday, according to The Weather Channel (TWC). Meanwhile, hot weather has subsided or is doing so in the Texas and California markets. Houston and the Dallas-Fort Worth metroplex aren’t expected to exceed the 90-degree area through the weekend, and Sacramento, CA will see its daily high drop from the mid 90s Thursday to the high 80s Friday. The South continues to record subpar (for early September) highs in the mid 80s for the most part.
The Energy Information Administration estimate of a 71 Bcf storage injection for the week ending Sept. 1 was a little higher than consensus expectations centered around the mid to high 60s Bcf. The volume was considered basically neutral but triggered a bearish reaction at Nymex, where traders sent October futures to a daily loss of 27.6 cents.
The Southern California border fell nearly a dime after SoCalGas issued a high-linepack OFO for Friday (see Transportation Notes).
A Midwestern marketer said the weather already was “beautiful here” Thursday and predicted to further cool off into the 70s when the cold front arrives. In fact, the upper section of the Midwest will get downright chilly over the weekend with daytime highs in the 50s and 60s and morning lows down into the 30s, TWC said.
The marketer said her company likes the overall downward trend in prices lately (not counting the rallies Tuesday and Wednesday). But it hasn’t been buying any daily gas this week because it thinks prices will sink further. She is aware that Michigan storage is very close to full, but said the company hasn’t gotten any further notices about storage from MichCon or Consumers in recent weeks.
Bentek Energy at least partially confirms the scarcity of Michigan injection space by noting that MichCon citygate receipt volumes have flipped into negative territory. Nominations into MichCon for Thursday were -220,000 MMBtu/d, according to Bentek (https://intelligencepress.com/features/bentek/), indicating that the giant LDC was returning much more gas into the interstate pipes than it was taking.
A Calgary-based trader said NOVA Inventory Transfer basis is widening in relation to the October screen. Gas is starting to back up into Alberta, he said, because weak demand from eastern markets has reduced exports into the TransCanada mainline significantly.
Florence is increasingly becoming a total nonevent for the gas market. The National Hurricane Center projects that the storm’s path will be turning more toward the northeast by Tuesday afternoon, keeping it out to sea from North America, although there is still a chance that it could brush Canada’s Maritimes provinces.
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