The cash market closed out the holiday-shortened trading week Friday much the same way as in the previous three days — with a majority of points again registering flat to moderately higher numbers.
A Gulf Coast producer confessed that it was surprising to him that the cash market continued to refuse to knuckle under to the triple whammy of negative influences: futures, mild weather and the usual loss of industrial load over a weekend.
The Florida citygate was a distant outlier from the rest of the market with a loss of 30 cents. Otherwise declines ranged from 2-3 cents to about a dime. Most points were flat to about C12 cents higher.
For a change Monday’s cash trading will have some prior-trading day futures support after the October contract rallied by 11.5 cents Friday (see related story).
Weekend temperatures were projected to get hotter in inland California and parts of the desert Southwest, but a warming trend in the South was tending to stall out in the low to mid 90s. Otherwise the status quo was still in effect: mild to cool conditions in Canada and most of the upper two-thirds of the U.S.
Tropical Storm Igor had appeared to be regressing to tropical depression status Friday morning, the National Hurricane Center (NHC) said. But later it regained tropical storm strength in the far eastern Atlantic. It was moving westward Friday but not expected to approach the eastern Caribbean area until near the end of this week — if then.
NHC was giving slightly better odds than before (50%) of a nearly stationary low-pressure system over the Windward Islands (the lower half of the Lesser Antilles chain between Puerto Rico and Venezuela) becoming a tropical cyclone over the succeeding 48 hours.
A flat Henry Hub saw a major slash in trading on the IntercontinentalExchange (ICE) online platform, falling from 1,006,400 MMBtu Thursday to 887,000 MMBtu Friday.
ICE said the largest price losses of about a nickel to a dime that it recorded Friday were concentrated in the Gulf Coast and Northeast. Most of its gains of about a nickel or a little higher were in the West.
A massive fire resulted from the Thursday evening explosion of a PG&E high-pressure transmission line in a southern San Francisco suburb (see related story). Although the fire was contained Friday, the intense residual heat hindered a prompt investigation of the cause.
However, a western trader said he didn’t think the gas line explosion and fire had anything to do with price strength in the Northern California market. Instead, rising temperatures in inland California were chiefly responsible for the PG&E citygate and Malin seeing some of Friday’s bigger gains, he said. The region had been in a cooling trend but was expected to get warmer during the weekend (with Sacramento rising into the upper 80s),he said, so power generators needed a bit more supply for their gas-fired units.
The trader noted that basis had been tightening between San Juan Basin and the PG&E citygate, but got looser again Friday as El Paso’s Blanco pool slipped a couple of cents while the citygate rose a little more than a nickel.
Phoenix should be reaching the mid 100s Sunday, he said, so it’s unlikely that El Paso’s warning of a potential high-linepack Strained Operating Condition (see Transportation Notes) would last.
Noting that the CIG-Henry Hub basis differential had come down to 52 cents Friday, a Rockies producer said he had seen CIG trade at a deficit of $1.20 or so as recently as last month.
The producer said his area is still seeing a lot of Canadian competition, speculating that Western Canada producers have so much gas in storage already that they’re forced to send more southward and tend to undercut Rockies prices. Although Western Canada prices still trailed those in the Rockies, the Canadian numbers recorded Friday’s biggest gains.
“I don’t think it’s an early fall,” the producer continued, referring to the moderate to cool conditions blanketing much of North America. The market should get some heat again before heating season begins in earnest, he said, but after all, “but weather conditions have been known to turn on a dime in this region. In the past I’ve seen snow in Denver as early as Labor Day.” But for now the Denver area is pretty mild, he added.
Bentek Energy’s U.S. Natural Gas Hub Flows chart showed throughput continuing to fall Friday at a majority of the 23 price points it covers. By virtue of its small volumes, Niagara again recorded the biggest percentage drop of 47%, or down 15,000 MMbtu from the day before to 16,000 MMBtu, Bentek said. But on a much bigger scale, Chicago citygate nominations dropped by 165,000 MMBtu to 1,806,000 MMBtu, or 8%, for the weekend.
Rising temperatures in Texas, the desert Southwest and inland California helped keep Waha the biggest percentage gainer by far on Bentek’s chart. Waha was up by 46,000 MMBtu (17%) to 316,000 MMBtu.
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