This week’s rally in the cash market appeared ready to pack up its tents and move on as nearly all increases outside the West diminished to about a nickel or less Wednesday. Traders apparently were coming to grips with the realities of relatively little weather-based or industrial load, further fading of storage injection opportunities except in the West, and the continuing lack of tropical storm threats to Gulf of Mexico production expected to last through the rest of the 2011 season.
The West, where a spell of high heat levels approaching 100 in Southern California is joining similar existing conditions in parts of the desert Southwest, recorded most of the largest increases amid quotes ranging from flat to about a quarter higher. Forecasts of overnight lows in the 40s and upper 30s from the Rockies through the Pacific Northwest into Western Canada also contributed to growing regional demand.
A few points were down by 2-3 cents to around a nickel, although one in the Northeast fell nearly 20 cents.
Volatility continued to roil Line 300 quotes on Tennessee. Zone 4 numbers recorded the day’s biggest advance of nearly 45 cents after having plunged by $1.02 a day earlier. But Zone 6, where Line 300 had spiked 40 cents on Tuesday, saw the largest decline of nearly 20 cents. One source said such large fluctuations are likely to continue until after the rest of Tennessee’s Line 300 expansion and other projects to increase takeaway capacity for burgeoning Marcellus Shale production have been fully absorbed by the market.
November futures will have negative guidance for cash traders Thursday after falling 12.7 cents (see related story) following two previous days of advancing.
With a little more than a month and a half to go in the official 2011 hurricane season, all remained quiet on the Atlantic front Wednesday, the National Hurricane Center said.
Another factor in western price strength was Rockies producers regaining 225,000 Dth/d of injection capacity Thursday at Questar’s Clay Basin storage facility after nearly two weeks of reservoir testing. Still, the CIG-Henry Hub basis spread remained relatively wide at nearly 30 cents.
Westcoast said linepack was on the verge of exceeding maximum target levels Wednesday.
It’s a pretty safe bet that screen weakness will ensure lower cash quotes at most if not all points Thursday, said a Texas-based marketer. In addition, expectations of another hefty storage build in Thursday’s report by the Energy Information Administration are another bearish factor weighing on the market, he said. And temperatures will be moderating a bit in the Northeast going into the weekend, he noted. Although the Northeast and Midwest are fairly cool for now, the marketer thinks seasonal temperatures in which few points are falling below the 50 area are unlikely to prompt much use of gas-fired heating at this point.
Stefan Revielle of Credit Suisse anticipates a 107 Bcf storage injection being reported for the week ending Oct. 7.
Â©Copyright 2011Intelligence 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.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |