A producer predicted “in the toilet” as the destiny of the cash market Friday after market influences were almost unanimously price-negative Thursday. As signaled by late retreats in Wednesday’s trading, swing quotes Thursday failed to sustain the midweek break in recent price slides except for flat to mildly firmer numbers at some points in the Pacific Northwest and Western Canada — not coincidentally the areas subject to most of the current winter weather.

Most of the market recorded losses ranging from about a nickel to nearly 20 cents. Northeast citygates tended to take the biggest hits.

Although not issued until after the completion of most cash business, the Energy Information Administration’s first report under a new system of estimating storage was highly anticipated to greatly expand the amount of working gas already stashed away, and in this regard it did not disappoint (see related story). The 55 Bcf in injections announced for last week was below most prior expectations, but that slightly bullish aspect was more than offset by EIA’s retroactive increase of 38 Bcf in volumes reported from early July through last week.

The screen, already in the red prior to the report, extended its losses afterward to down 14.8 cents for the day. That was accompanied by further sagging in the December futures contracts for crude oil and heating oil, although crude managed to stay handily above $28/bbl.

A Midcontinent marketer said the storage revision “was good news if you were short, which we were, so we liked it.” Analyst Kyle Cooper of Citigroup had this comment: “With 3,121 Bcf in storage, there are certainly some facilities nearing capacity and high pressures in those caverns make this injection [the most recent 55 Bcf] even more impressive.”

Besides the twin onuses of high storage inventories and weak energy futures, gas must continue to struggle with unsupportive weather for a while longer. Cold conditions near freezing currently reign only from the upper Pacific Coast through the western edges of the Midwest, and that does little for overall load because that section of the continent has relatively little population, one source pointed out. A bit of warming is due in the lower Rockies Friday, according to The Weather Channel, although a new Pacific storm system is due in the Pacific Northwest Sunday.

Otherwise most forecasts are generally a Chamber of Commerce dream. Mild weather is expected to remain in the Northeast though at least next week, a regional utility buyer said. From the Mid-Atlantic through the Midwest and most of the South, daily highs are only reaching the 70s. And highs ranging up to the mid 80s from East Texas along the Gulf Coast to Florida are not creating enough air conditioning load to prop up the market, especially with several nuclear plants in the process of returning to full operation from refueling/maintenance or other outages.

A high-linepack OFO by PG&E (see Transportation Notes) had only a modest impact on the California market despite the order’s zero tolerance for positive imbalances. Malin was flat while the PG&E citygate and Southern California border fell about a nickel (SoCalGas did not issue an OFO). A Sempra Energy spokeswoman said the wildfires in Southern California still had not damaged the distribution facilities of either SoCalGas or San Diego Gas & Electric as of Thursday.

Beside’s PG&E’s OFO, there were other pipeline signals that market areas aren’t absorbing all the supplies being produced but not targeted for storage. Algonquin and Texas Eastern cited high linepack and forecasts of low-demand weather in extending bans on due-pipeline imbalance make-ups through at least the weekend. The two affiliates also said they were unable to accept the creation of due-shipper imbalances. And Sonat, while saying a Type 6 OFO was unlikely Friday for either long or short imbalances, said the OFO potential was “too close to call” for long imbalances Saturday and Sunday.

The Gulf Coast producer who foresees “toilet” prices Friday said the futures and storage factors were exacerbated by the fact that “it is going to be warm over a weekend, so prices should really cave.” Early weekend deals at Henry Hub were being done around $4.15 Thursday afternoon, down about a quarter from that day’s average for Friday flow, he said. “With prices in the Gulf dropping as much as I expect them to Friday, we should be able to work some spreads to the market area on Tetco [Texas Eastern] and Transco.”

A couple of sources agreed that bidweek trading dried up significantly. “I saw almost nothing in new November deals today [Thursday],” a marketer said. “I think a lot of folks might have finished up [November business] Wednesday.” And a producer added, “There’s not many folks working monthly deals any more [this week]. We’ll still look at offers, but there’s not much to be excited about. Just a few small deals here and there as traders try to balance their books and tie up loose ends. Once the [futures] contract is set, bidweek gets a little dull.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.