Prices rose across the board Wednesday. Cooling load is building a bit in the Rockies, Midcontinent and western South but remains light overall. However, the ongoing shortfalls in Gulf of Mexico (GOM) production and the previous day’s 27.3-cent increase by October futures supported Wednesday’s cash prices. Also, storage purchases reportedly are fairly strong as the end of the traditional injection season begins to loom.
Most points saw double-digit gains, which overall ranged from a couple of pennies to a little more than 85 cents higher. Quotes were especially strong in the Rockies, where Denver was expected to see a high around 87 Thursday, and in South and East Texas, where the Lone Star State is warming up to peak temperatures near 90 again after a cooling-off period from Hurricane Ike.
Thursday’s cash market will have negative screen guidance after the October contract fell 25.2 cents Wednesday (see related story).
GOM shut-in statistics fell another 338 MMcf/d to 4,222 MMcf/d, according to Minerals Management Service (see related story).
Malin and the PG&E citygate realized strong gains of nearly 35 cents after PG&E said it was ending a high-inventory OFO Thursday.
NGI will be introducing its new SoCal citygate index Oct. 1. A western trader reported seeing the citygate being offered at $5.78 and bid at $5.72 for October, but as of Wednesday he hadn’t seen anything trade there yet. The citygate bid-offer range was starting out below the Southern California border, which had more than 100 MMcf/d trade in the low $5.80s, he said. But that’s just a matter of timing with mismatched bids and offers, which is rather understandable with a brand new location, he said, adding that the relationship will get adjusted eventually.
It’s warming up here, said a trader in the North Texas region. Despite the strength of Wednesday’s cash market, she expects prices to be down Thursday because of the Nymex weakness and a continuing lack of significant weather-based demand.
She said her company had traded on several Gulf Coast pipes for October at index flat on everything so far and was almost finished with bidweek business. She reported seeing bids for “a bunch” of pipes on IntercontinentalExchange at index minus 1 cent, while offers were at plus 0.5 cent, which she called “typical spreads.”
Another western source said the October PG&E citygate was trading at basis of minus $1.01 Wednesday. Loads were small, though, he said, because October is a mild month in PG&E’s Northern California service territory. Basis spreads from Ike’s supply shortfall in the Gulf Coast are affecting western markets, which is partly why Malin and the PG&E citygate were able to manage small gains Tuesday in spite of the OFO, he said.
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