A week of firmness in most of the cash market came to an end Wednesday as slight cooling trends in some areas combined with a prior-day screen loss of 9.3 cents to push prices lower at a large majority of points.
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The oil and natural gas industry last Wednesday generally welcomed the Obama administration’s proposed plan to open up the Mid-Atlantic and South Atlantic waters and parts of the eastern Gulf of Mexico (GOM) to expanded exploratory and development activities, saying it was a good start. But others, such as the U.S. Chamber of Commerce and American Solutions, noted the the proposed plan was far from a sure thing, with President Obama stressing that the offshore areas “will be considered potential areas for development.”
Based primarily on the previous day’s 25.1-cent run-up by October futures, but also getting a slight boost from a pinch of extra cooling load returning to the desert Southwest and parts of the South along with forecasts of Friday lows in the 30s in upstate New York and some New England locations, the cash market was flat to higher across the board Thursday.
Even as already modest weather-based demand continued to diminish or see only slight increases, prices again registered fairly strong gains at all points Wednesday in an extension of this week’s post-holiday rally. It wasn’t much, but the previous day’s futures increase of 7.9 cents gave some backing to the cash market, and the fact that prices were still fairly low compared to previous months may have attracted buyers who still had options on where to place the supplies.
Prices continued to fall at a slight majority of points Friday, but the Midcontinent joined nearly all of the West in rebounding. Most eastern markets bowed to generally moderate to cool weather and the previous day’s 12.7-cent decline by the new prompt-month November futures contract. A cool Midwest was due to start warming up again over the weekend, which helped explain the Midcontinent gains, but market-area quotes were softer.
Declines of cooling load in the Midwest and to a slight degree in the South, along with the removal of one tropical storm threat to offshore production, resulted in falling prices at most points Thursday. The previous day’s 7.6-cent drop by September futures added another bearish note to Thursday’s cash market.
Feeding on recent futures strength and slight cooling trends in northern market areas, prices ranged from flat to about 40 cents higher at a large majority of points Wednesday. Texas Eastern-Kosciusko in the Gulf Coast and Transco Zone 6-New York City were the only contrarian points to see modest losses of up to a nickel.
XTO Energy Inc. is on track to boost its natural gas-rich production volumes by 10% over 2006 levels with only a slight increase to capital spending. The independent budgeted $2.4 billion for development and exploration activities, slightly above the $2.1 billion it spent last year, with an extra $200 million earmarked for pipeline infrastructure, compression and processing facilities.