Arrival of some heating load fails to offset recognition of generally weak weather fundamentals.
The market logic may have seemed odd to some, but after two days of price advances that didn’t seem justified in the face of widespread mild weather, nearly all points were in retreat as colder conditions accompanied by snow in higher elevations entered the overall forecast. However, the addition of heating load to the market equation was expected to be relatively small and was accompanied by an ongoing lack of threatening tropical activity.
Most trading locations dropped from a couple of pennies to about 20 cents, with a large majority of the losses confined to single digits. Gains of up to nearly 15 cents in Tennessee’s three farthest downstream zones were joined by flat to a nickel higher quotes at the Consumers Energy citygate and four Pacific Northwest market-oriented points. Northwest Pipeline will have zero capacity at Kemmerer Compressor Station Thursday and Friday and had encouraged shippers with delivery points north of the station to source supply at such points as Sumas, Kingsgate and Stanfield (see Daily GPI, Sept. 28). In addition, Westcoast said its linepack had returned to normal after being on the high side as the week began.
Expectations of a triple-digit build in storage inventories being announced for the week ending Sept. 23 were another bearish factor, with consensus estimates in the low to mid 100s Bcf.
After lending next-day support to the cash market with increases Monday and Tuesday, October futures spent their expiration day in the red, winding up the day with a loss of 6.8 cents (see related story).
Ophelia was no longer just a “former” tropical storm, having strengthened enough to regain that status by Wednesday. However, it and Tropical Storm Philippe farther to the east were considered almost certain to be nonevents for the industry keeping them well off the coast in the mid-Atlantic.
Snow had begun falling in parts of the Rockies a couple of days ago, and AccuWeather.com said “much colder air” would move into the East and South this week, with the region’s first snow showers of the season expected in higher elevations of the Rockies. Otherwise, there was little change in the overall outlook: hot in Florida and the Texas-Oklahoma-Louisiana area through the desert Southwest into interior California, and mild to very chilly elsewhere.
Pipeline restrictions are negligible for the time being amidst the typical early-fall weather being enjoyed by residents of many regions.
An Upper Midwest marketer said local weather had become “a little nippy” with nighttime lows dipping into the lower 30s. It was good to have a smidgen of heating load arriving because her company had very little storage injection space left for its customers, she said. The marketer reported buying October baseload at last-day settlement basis of plus 23.5 cents into Consumers Energy and plus 27 cents into MichCon.
Likely in response to the futures weakness, IntercontinentalExchange (ICE) saw growing dips in bidweek numbers on its online platform Wednesday. For instance, El Paso-Permian was down about 3 cents from Tuesday to $3.59, ICE said, while Northern Natural-demarc was a little more than 2 cents lower.
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