Following two days of mixed numbers, the cash market closed out September business Thursday with virtually all points on the same price page and skyrocketing (except for a flat Florida citygate). Dollar-plus spikes were frequent as quotes were jolted higher by the screen’s $1.251 move higher on Wednesday as October natural gas futures went off the board. Weather fundamentals are generally weak right now as comfortable early-autumn weather gets more firmly established in most areas.
NGPL Louisiana, which had just begun to be traded again Wednesday after receiving no quotes since Tuesday of the previous week, was conspicuous in rising a little less than 15 cents Thursday. Otherwise gains ranged from a little more than 55 cents to about $1.75. All western advances were solidly in triple digits.
Henry Hub trading remained inactive as a systemwide force majeure by Hub operator Sabine Pipe Line entered its eighth day. But however minuscule they were, quotes were received Thursday for Tennessee Line 500 and Trunkline-West Louisiana, which also had been inactive earlier in the week.
Gulf of Mexico (GOM) shut-in levels retreated just a bit, according to Minerals Management Service (MMS). Based on reports from 76 companies, it estimated that 7,979.72 MMcf/d remained offline Thursday, about 47.6 MMcf/d less than the day before (see related story). Even offshore oil was starting to trickle back, MMS said. After reporting that 100% of normal GOM oil volumes of about 1.5 million bbl/d was shut in through the first half of this week, the agency said the outages were down to 1,478,780 bbl/d Thursday, or 98.59% of normal.
The Energy Information Administration said 53 Bcf was injected into storage during the week ending Sept. 23. The volume was below most prior expectations centered around 60 Bcf, but it failed to evoke much reaction at Nymex. The screen wavered for a while on either side of unchanged following the report before finally eking out a gain of nearly a dime on the day. Because of the massive Gulf Coast shut-ins caused by Hurricanes Katrina and Rita, it was hardly surprising that the Producing Region saw a net build of zero.
A tropical wave has been meandering slowly westward through the Caribbean Sea this week, but has shown little inclination to strengthen much.
Air conditioning load is currently light outside the desert Southwest. A small amount of heating load might be surfacing in the Midwest and Northeast after cold fronts started taking overnight lows into the 40s in those regions, but it was not believed to be significant. A cold front has penetrated upper levels of the South, but fairly warm temperatures are expected in the lower half of the South this weekend.
A Calgary-based producer who trades Western Canada and the Pacific Northwest reported no problems from Henry Hub being down during the October bidweek. After all, “Nymex still had a quoted price for it,” he pointed out. Because of the Gulf Coast shut-ins, a lot of futures traders were short October gas and weren’t going to get physical delivery, so buying their positions back drove up the screen Wednesday, he said. He is selling his British Columbia production in the intra-Alberta market because transport to Malin isn’t covering variable costs, he said.
It was a “very choppy” bidweek market for the producer. He found little demand for BC gas at Sumas both because of shoulder month economics and the fact that domestic Rockies gas is still cheaper than Sumas. Also, transport issues on Northwest hampered the Sumas market, he added.
A Gulf Coast producer also had no problems with the Henry Hub outage, since “I don’t trade that point anyway.” Tight supplies in the Gulf Coast were the main bidweek issue for him, he said. The producer said he wasn’t really surprised by the screen spike Wednesday. “Nothing that happens in [energy] futures surprises me any more,” he said.
This bidweek was “one wild ride,” said an industrial end-user. The only effect he saw from the Henry Hub absence was “general uncertainty in the market; it hurt liquidity,” he said. Trading on Southern Natural Gas was a major problem because so much production is offline on that pipe, he said. October prices got “a little crazy,” the end-user continued, especially with the dollar-plus spike at Nymex on expiration day. He reported that when he let his dog out of the house at 5 a.m. Thursday, Chicago-area temperatures were at 42 degrees. That may be spurring a little heating load, but not much, he said, because daytime weather is “beautiful.”
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