Prices continued to fall Wednesday at most points, although the declines were smaller than Tuesday’s in most cases. And although the Rockies joined the overall softness after having constituted the sole rising market area a day earlier, a number of other points at scattered locations ranged from flat to about 20 cents higher Wednesday.
Softness continued to dominate the cash market due to mostly moderate late-October weather in which few areas have gotten cold enough to create substantive heating demand and to November gas futures extending a losing streak into its fourth day with a 13-cent drop Tuesday. However, Thursday’s cash trading will have prior-day futures support after the contract made a solid 21.1-cent rebound Wednesday.
Wednesday’s majority losses ranged from 2-3 cents to nearly 35 cents.
The desert Southwest, where Phoenix is returning to highs in the low 90s, and Florida, where Florida Gas Transmission extended an Overage Alert Day for market-area customers while tightening the imbalance tolerance (see Transportation Notes) are about the only places where any cooling load remains. The rest of the South and most other parts of the U.S. will remain moderately cool to chilly Thursday. However, a warm front will begin to raise temperatures a bit in the eastern South Thursday, with the warm-up spreading into the western South going into the weekend.
Eastern Canada will continue to see seasonal temperatures along with the U.S. Northeast. But Western Canada is starting to feel a bit wintry with sub-freezing overnight lows due in Calgary.
Rockies producers got some good news from Questar, which said a shut-in test of its Clay Basin storage facility was winding up as scheduled Wednesday and injection/withdrawal nominations would be available again for Thursday’s gas day (see Transportation Notes).
Although the Southern California wildfires have caused major problems for the area’s power operations, especially those of San Diego Gas & Electric (SDG&E), they have had no discernible impact on the transmission and/or distribution systems of SD&GE or SoCalGas (see related story).
It may have been puzzling to see Bentek Energy reporting a minus 88,000 MMBtu/d volume at Waha Wednesday in its U.S. Natural Gas Hub Flows report (https://intelligencepress.com/features/bentek/). But Bentek’s Samantha Fox explained that while El Paso usually delivers gas into Oasis at Waha, on Wednesday El Paso was receiving gas there, which when netted with other Waha interconnects (which were normal, she said) resulted in the overall negative Waha flow.
An Upper Midwest marketer said it appears that citygate volume reductions by Consumers Energy (see Daily GPI, Oct. 19) probably will last through the end of the month. It’s gotten barely cold enough in the area this week to get at least a few gas furnaces fired up, she said; after all, a frost was predicted for overnight Wednesday in her city. The forecast indicates that such conditions will last at least another week, she said.
The marketer expressed surprise at the big rebound in futures Wednesday, saying she couldn’t understand what caused it unless, perhaps, the gas contract was hitching a ride on crude oil’s coattails again. December crude rose nearly $2 to settle above $87/bbl.
Early Wednesday analyst Tim Evans of Citigroup attributed the natural gas futures rebound largely to a low-pressure system that was expected to move into the northern Caribbean Sea on the south side of Cuba in the next few days. “Interaction with the islands along its path may impede any development,” Evans said, “but the system is certainly worth monitoring.”
Most of the Nymex strength came after cash had finished trading Wednesday, a Houston-based marketer noted, so he thought it was hard to tell how much influence the screen would have in inducing a potential cash rally Thursday. However, cash quotes were moving higher in late deals Wednesday, which often is a fairly reliable indicator of next-day price direction, he said. He said the Consumers Energy citygate restrictions initiated late last week because of near-full storage had grown to about 50% Wednesday, although the percentage tends to vary each day.
Chicago citygate basis for November was looking like minus 1.5 cents Wednesday, the marketer said, but when trading tied to NGI‘s index starting Thursday gets factored in, he figures the basis will be like flat to plus a penny. He was seeing NIPSCO deliveries being reported at index plus 1.5-2 cents, with Nicor at index plus 2-3 cents.
A Reuters survey of 20 industry players found an average expectation of a 54 Bcf storage build for the week ending Oct. 19, with estimates ranging from 36 Bcf to 65 Bcf.
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