Mixed cash price movement continued Wednesday, but there were no gains outside the still-recovering Rockies other than on intrastate Midcontinent pipe OGT. Softness dominated the rest of the market despite producers starting to evacuate Gulf of Mexico facilities because of relatively light cooling load in most areas and the screen’s 8.5-cent decline Tuesday being followed up by a much larger loss Wednesday.
Most points ranged from flat to a little more than 30 cents lower. OGT’s rise of about 15 cents combined with Rockies gains as high as about $1.35.
Easing transport constraints in the Rockies were abetted by modest power generation load in the region, with Denver’s high temperature expected to be just under 90 degrees Thursday. Having begun “free flow operations” Monday afternoon and being able to restore deliveries from WIC and CIG (see Transportation Notes), Cheyenne Plains is now able to flow 390 MMcf/d, or half of its pre-shutdown capacity, a spokesman for pipeline parent firm El Paso Corp. confirmed.
Other than the interior lower West, however, temperatures tended to be seasonal to below normal. A warming trend has slowed to a crawl in the Midwest, and while Northeast thermometer levels were forecast to rise Thursday, highs would only get to around 80 in New York City and Boston. Even the South was having difficulty peaking above the upper 80s, and Phoenix has retreated recently from its usual late-summer triple-digit highs to the high 90s.
Some have doubts about whether a low-pressure system due to pass over Florida and reach the eastern Gulf Thursday will amount to much, although the National Hurricane Center and other forecasters say it has the potential to become Tropical Storm Jerry. Regardless, the pace of evacuations of nonessential offshore personnel was picking up Wednesday (see related story), although no shut-ins had been reported.
Nymex traders were among those not impressed with the possibility of a threat to Gulf of Mexico production, apparently preferring to focus on mild weather fundamentals and several recent reports that storage injection capacity is growing very tight. They sent the October natural gas futures contract to a 38.8-cent loss Wednesday despite crude oil futures advancing to yet another record level near $82/bbl on the basis of a bullish supply report Wednesday morning and expectations that the Federal Reserve’s interest rate cut would boost future energy demand. The continuing screen weakness makes it likely that cash will again be softer Thursday.
The demand destruction that the stormy system was causing in Florida was illustrated by Bentek Energy’s U.S. Natural Gas Hub Flows report (https://intelligencepress.com/features/bentek/). Its monitoring of flow nominations for Wednesday showed that Florida Gas Transmission market-area deliveries had the biggest volumetric decrease of 264,000 MMBtu/d among all points covered.
Earlier this week the low-pressure system in the Atlantic seemed rather benign, a Gulf Coast producer said, but it seems the storm changed trajectory and now appears to be more of a threat. Otherwise the cash market was fairly quiet amid overall light demand, he added.
The National Weather Service expects above-normal temperatures during the Sept. 24-28 workweek in virtually all of the eastern two-thirds of the U.S. It exempted only normal conditions in the southern end of the Florida peninsula from a forecast of above-normal readings everywhere east of a line running southward from eastern Montana and Wyoming through central Colorado and New Mexico. The greatest variations above normal will occur from northeast Texas and North Louisiana through the entire Midwest and Northeast, the federal agency said. It looks for below-normal temperatures throughout the Pacific Northwest, the northern end of California and a coastal strip of California south to the Mexican border.
Reuters said its survey of 24 industry players found an average expectation of a 67 Bcf storage build during the week ending Sept. 14. Estimates ranged from 53 Bcf to 79 Bcf, the news service said.
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