NYMEX natural gas ends mixed, fronts lose on weather
NEW YORK, Nov 20 - NYMEX Hub natural gas futures ended mixed Friday in
a fairly active session, with front months pressured all day by
bearish weather forecasts and a soft physical market, industry sources
said.
December slipped five cents to close at $2.163 per million British
thermal units after trading between $2.125 and $2.228. January settled
three cents lower at $2.294. Other deferreds ended mixed, with some
year 2000 contracts finishing up slightly.
''There's nothing offering any hope for the bulls. It looks like the
weather stays pretty mild right into early December. There's just no
demand, and LDCs (utilities) are starting to give back gas,'' said one
Midwest trader, adding some late short covering before the close
lifted December off its lows.
While some traders said the market may be a bit oversold and due for a
technical bounce, few saw much chance for a significant rally ahead of
the December expiry Tuesday and bidweek next week, particularly with
no cold on the horizon and storage in good shape.
WSC expects normal to slightly below normal weekend temperatures in
the Northeast and Mid-Atlantic to warm to two to six degrees F above
normal Monday and Tuesday. In Florida and the Southeast, above normal
readings Friday will gradually cool to about normal levels early next
week.
After a cool Friday in the Midwest, temperatures are expected to warm
to two to 10 degrees above normal Sunday through Tuesday. In Texas,
normal to slightly below normal readings Friday also are expected to
warm to three to six degress above normal Sunday through Tuesday. The
Southwest should range from normal to below normal for the period.
The NWS six- to 10-day forecast released late Friday calls for above
to much-above normal temperatures for most of the nation, except for
parts of the East and West Coasts where some seasonal readings are
expected.
Chart traders agreed the technical picture turned increasingly more
bearish this week as December blew through a series of chart supports,
including today's break of $2.14.
They now pegged support in the remaining spot continuation chart gap
between $2.12 and $2.125, with psychological support expected at $2.
Minor resistance was seen at $2.24, $2.30 and $2.39, with better
selling anticipated at Wednesday's high of $2.51 and at the recently
formed double top at $2.63-2.64.
In the cash Friday, Henry Hub weekend quotes on average slipped three
cents to about $2.07. Midcon pipes were down eight cents to near the
$2.00 level. In the West, El Paso Permian slumped more than a dime to
the low-to-mid $1.90s.
Weekend gas at the Chicago city gate was several cents lower in the
mid-teens, while New York lost a couple of cents to the high $2.20s.
The NYMEX 12-month Henry Hub strip slipped 1.6 cents to $2.204. NYMEX
said an estimated 81,643 Hub contracts traded today, up from
Thursday's revised tally of 75,306.
Friday Mid-session NYMEX Natural Gas Comments
New York-Nov. 20-FWN--The natural gas futures are sitting just above
key support at midsession.
While fundamentals still paint a negative picture, traders said a lot
of negative news has already been factored into the market over the
last 10 days. Still, next week should be a rather negative week for
the market that will limit the extent of any short-covering rally
ahead of expiration of the December options on Monday and the December
futures on Tuesday.
Thursday afternoon's monthly National Weather Service 90-day outlook
showed minimal changes from last month because the changes in
forecasting tools have changed very little. The 90-day outlook through
February calls for generally warmer-than-normal temperatures across
the southern half of the nation. The only areas indicated to have
sub-normal temperatures were Minnesota and North Dakota.
"The forecast provided little reason to cover shorts," one broker
commented.
December natural gas futures closed below a key support point at
$2.240 this week. Traders said the December is supported at $2.12 to
$2.14, with resistance seen at $2.240 to $2.280.
However, one broker noted that minimum downside targets have been
reached. But the current pattern still suggests there is a little
more downside risk into expiration.
He also noted that the 11- to 15-day forecasts are suggesting some
colder weather could move down out of Canada and Alaska and that
could put some support into the market. "Until there is some weather,
the threat of short covering remains minimal," he said.
He said the key price level to watch is the $2.270 level in January
gas futures. A break below this level would likely produce another 10
cents of downside risk.
He said that with summer months well supported and trading at a
premium to December, there is some hesitancy to continue to sell
nearby months.
The storage situation remains negative.
The AGA reported that there were net withdrawals of some 45 bcf this
past week. That was in the middle of trade estimates but still below
the 4-year average of 60 bcf of withdrawals and 64 bcf withdrawn a
year ago.
But the major surprise in the AGA report were the revisions to storage
stocks and capacity. The AGA raised storage capacity from 3,190 bcf to
3,248 bcf. It also revised the prior-week's storage figure from 3,070
to 3,127 implying a new record large stockpile to begin this winter
season.
With the changes in stocks and storage capacity, the surplus of gas
compared to a year ago rose to 332 bcf, traders noted. Apparently
companies in the survey have been reporting the raw data to AGA by
percentage of capacity rather than in bcf terms and the changes in
capacity pushed up total stocks of gas in storage, traders explained.
Traders agreed that this market is going to focus on next week's AGA
report. A year ago there were over 100 bcf withdrawn from storage in
the comparison week. Some traders believe that withdrawals may not top
30 bcf in next week's AGA report because of the balmy weather this
week.
U.S. spot gas prices falter ahead of warmer week
NEW YORK, Nov 20 - U.S. spot natural gas prices, as expected, turned
lower Friday due to the milder forecasts for next week and bloated
storage caverns, industry sources said.
Swing cash prices at Henry Hub were quoted at $2.05-2.10 per mmBtu,
indicating a loss of about three to four cents from Thursday.
Midcontinent swing gas also traded lower to about $1.99-2.00, with
Chicago city-gate pegged at $2.15-2.16.
In west Texas, Permian Basin prices slid 13 cents to about $1.92-1.94,
while San Juan values were talked widely in the high-$1.80s to mid
$1.90s.
In the East, cooler-than-normal weather forecast for this weekend
pushed Appalachian prices a little higher to the mid-to high $2.20s.
New York city-gate prices eased slightly to $2.25-2.30, sources said.
Forecasts for next week show above-normal temperatures across the
U.S., with highs expected to reach the 50s and 60s in the upper
Midwest and Northeast and the 70s in Texas, according to Weather
Services Corp. (WSC).
U.S. spot natural gas prices - November 20
NOVEMBER ($/mmBtu) 11/20 11/19
U.S. GULF OFFSHORE 1.93/1.98 1.94/1.99
TEXAS COAST 1.97/2.02 2.03/2.08
WESTERN TEXAS 1.91/1.96 2.04/2.09
LOUISIANA COAST 2.02/2.07 2.05/2.10
NORTHERN LOUISIANA 2.04/2.09 2.07/2.12
OKLAHOMA 1.97/2.02 2.05/2.10
APPALACHIA 2.24/2.29 2.20/2.25
SO. CALIFORNIA BORDER 2.27/2.32 2.33/2.38
HENRY HUB 2.06/2.08 2.09/2.11
WAHA HUB 1.95/2.00 2.05/2.10
Canadian natiral gas spot prices extend losses on weather, supply
NEW YORK, Nov 20 - Canadian natural gas spot prices continued to
retreat Friday amid milder weather and a softer NYMEX contract,
industry sources said.
Temperatures in Calgary were expected to reach highs in the low- to
mid-30s (degrees Fahrenheit) over the next few days, according to
Weather Services Corp.
NYMEX's December contract fell to a low of $2.125 in today's session,
down 8.8 cents from Thursday's settlement.
Day prices at Alberta's AECO storage hub were off another 15 cents in
the mid-C$2.50s per gigajoule (GJ), sources said.
Linepack on NOVA's system rose to 12.873 billion cubic feet per day
(bcfd), up from 12.711 bcfd.
At Westcoast Energy's Station 2 compressor in British Columbia, day
business was quoted widely at C$2.52-2.60, down about 18 cents from
Thursday.
Prices were also weaker at the Sumas/Huntingdon export point, where
trading was reported done at US$1.81-1.86 per million British thermal
units (mmBtu).
In the east, pricing at the Niagara export point was also down
slightly to the mid-US$2.20s per mmBtu.
Separately, today's Canadian Gas Association storage report revealed a
minor build in inventories last week. Stocks totaled 498.4 bcf as of
November 13, which was up about a half bcf from the previous week.
Canadian spot natural gas export prices - November 20th
EXPORT (NOV SWING) $CDN/GJ $US/MMBTU
HUNTINGDON B.C. 2.61/2.68 1.81/1.86
KINGSGATE B.C. (TO PNW) 2.64/2.70 N 1.83/1.88 N
MONCHY SASK 2.33/2.40 N 1.62/1.67 N
EMERSON MAN 2.77/2.84 N 1.93/1.98 N
NIAGARA ONT 3.19/3.26 2.22/2.27
Canada/U.S. dollar conversion based on Bank of Canada rate.
Canadian spot natural gas domestic prices - November 20th
DOMESTIC (NOV SWING) $CDN/GJ $US/MMBTU
ALBERTA PLANT-GATE 2.41/2.46 1.68/1.71
ALBERTA BORDER - EMPRESS 2.64/2.69 1.84/1.87
STATION 2, B.C. 2.55/2.60 1.77/1.81
SASK. PLANT-GATE 2.41/2.46 1.68/1.71
TORONTO CITY-GATE 3.16/3.23 2.20/2.25
1-YR PCKGS - EMPRESS 2.69/2.74 1.87/1.90
AECO 2.53/2.58 1.76/1.78
N=notional. One yr package beginning Nov. 1, 1999.
Canada/U.S. dollar conversion based on Bank of Canada noon rate.
One year packages converted to U.S. dollars at a 12-month forward rate.
Canadian natural gas Assoc storage survey - Nov 13th
TORONTO, Nov 20 - Canadian Gas Association (CGA) weekly survey of
Canadian natural gas in storage in billion cubic feet (bcf) for the
week ended Nov 13:
Pct Full Pct Full
11/13/98 11/06/98 Pct Full Week Ago Year Ago
East 236.47 232.85 97.3 95.8 91.9
West 261.94 265.07 94.9 96.0 85.4
Total Canada 498.40 497.92 96.0 95.9 88.4
East-West division is the Manitoba/Saskatchewan and North
Dakota/Minnesota borders.
East capacity 11/13/98: 243.06 bcf, 11/06/98: 243.06 bcf.
West capacity 11/13/98 276.02 bcf, 11/06/98: 276.02 bcf.
The Canadian Gas Association survey includes liquefied petroleum gas,
Canadian operators of gas storage and Canadian companies contracting
gas storage in the U.S.
The survey does not include statistics from the 25 bcf Sabine storage
facility in Alberta.
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