The September aftermarket got off to a very weak start in most cases Thursday. Nearly all points plummeted by anywhere from 35 cents to 90 cents Thursday as cooling load continued to shrink and Wednesday’s screen dive of nearly 60 cents applied negative pressure on physical prices.
The exceptions to the massive overall softness were rebounds at some of the Rockies points that had dropped so precipitously the day before. CIG led the charge higher with a half-dollar gain, while Northwest-South of Green River, Opal and Questar also rallied in varying degrees. However, Kern River and Northwest-domestic continued to fall by about a nickel each. A Sumas dip of nearly 40 cents narrowed its premium over Northwest-domestic to less than a dollar again.
The only severe heat remaining is in the desert Southwest, and even that region has some pockets of moderate weather. Phoenix, Las Vegas and Fresno, CA are the only major cities expected to feel triple-digit highs Friday, but the forecast for Albuquerque and Santa Fe in New Mexico calls for peak temperatures only in the mid 80s. Things are downright “coolish” in the Northeast and Midwest, where Friday’s highs are not due to get above the low 70s at most locations.
More price weakness is a virtual certainty Friday. October futures registered a further loss of 24.2 cents Thursday, no heat waves are in sight at this point, a refreshed Tropical Storm (or possibly Hurricane) Ernesto will keep power generation load along much of the East Coast to a minimum over the next couple of days, and the extra reduction of industrial demand associated with a long holiday weekend will come into play.
The Energy Information Administration fell short of consensus expectations in the 50s Bcf when it reported a storage injection of 48 Bcf for the week ending Aug. 25. Nymex traders failed to see the report as bullish, however, since the sizeable storage surplus to year-ago and five-year average levels still exists and the moderate weather in much of the U.S. and Canada this week is expected to yield a considerably larger build in next week’s report.
As expected, Ernesto was able to use the warm Atlantic waters off the coasts of Florida, Georgia and South Carolina to regenerate into a tropical storm and it had the potential to become a Category One hurricane before hitting land again somewhere near the South Carolina/North Carolina border Thursday night, the National Hurricane Center said. At 5 p.m. EDT the center the storm’s center was about 120 miles south-southwest of Wilmington, NC, and about 75 miles east of Charleston, SC. It was moving north-northeast at nearly 17 mph. An Air Force reconnaissance plane indicated that maximum sustained winds were about 70 mph — 4 mph short of hurricane status, the NHC said.
A Texas-based trader said Thursday was primarily a game of “playing catch-up, trying to get things lined up for the first.” She noted that pipelines have been warning shippers against parking gas that they can’t get rid of otherwise on the pipes’ systems over the Labor Day weekend, when demand is expected to be very low. As a result, she had a couple of independent producer clients worrying about placing their gas for the weekend, so they asked the trader to sell Thursday for flows Friday through Tuesday. She said she was able to accommodate most of their request.
Undoubtedly there were a few people still tying up loose ends on September baseload Thursday, but the trader said she was not aware of anybody still doing bidweek deals. “It’s dead here,” she said, and it’s likely to be even “deader” Friday. An early closure of Nymex trading (see futures story) and the usual desire to get a jump on a long weekend meant her company will be closing down shop early Friday, and she expected the same at most other operations.
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