KORNER REPORT / Natural Gas & Crude Oil
NYMEX Natural Gas Ends Down On Softer Cash, Weather
NYMEX Hub natural gas futures ended lower across the board Friday in
a fairly active session, pressured most of the day by a softer
weekend physical market and revised weather forecasts for next week,
sources said.
February tumbled 11.4 cents to close at $1.778 per million British
thermal units after trading between $1.77 and $1.917. March settled
10.3 cents lower at $1.805. Other deferreds ended down one-half to
8.6 cents.
''The push up this week was based on storage and expectations for
colder weather next week, but a well-respected forecaster flipped
around again today, which hurt the market,'' said one Midwest trader,
noting NYMEX was unable to rally today, which forced the longs to
take profits ahead of the weekend.
While some had expected a pre-weekend, profit taking pullback after
three consecutive up days, most agreed weather forecasts next week
would be the key to the next move.
WSC expects eastern temperatures to climb to as much as 20-25 degrees
F above normal Friday and Saturday, then cool to near normal levels
by Monday and Tuesday. The Midwest will see a similar pattern, with
much above normal readings Friday and Saturday dipping to closer to
normal levels early next week.
In Texas, the mercury will hit 10 degrees above normal Friday before
slipping to two to eight degrees above normal later in the period.
The West will see above seasonal temperatures early in the period
cool to as much as 12 degrees below seasonal later, particularly in
the Pacific Northwest.
The NWS six- to 10-day forecast released late Friday calls for above
seasonal temperatures for most of the nation.
Technical traders said February's weak close today negated
constructive signals seen earlier this week. Most agreed the spot
contract was range-bound, but could test support at the $1.73
contract low early next week without colder weather. Key support was
expected at $1.61, the 1998 spot continuation low from August.
Trendline resistance was seen in the low-$1.90s, with further selling
likely at the 40-day moving average at $1.94 or at the $2.00
psychological level. Major resistance was still pegged at $2.085, a
prominent high from early January.
In the cash Friday, Henry Hub weekend quotes slipped a couple of
cents to the low-$1.80s. Midwest pipes were down slightly in the mid-
to-high $1.70s. In the West, El Paso Permian was two to three cents
lower at about $1.70.
Gas on Transco at the New York city gate slipped several cents to
$2.05-2.10, while Chicago was three cents lower in the high-$1.80s.
The NYMEX 12-month Henry Hub strip skidded 5.2 cents to $1.992. NYMEX
said an estimated 82,800 Hub contracts traded today, down from
Thursday's revised tally of 85,469.
NYMEX February natural gas expires Wednesday, January 27.
US Spot Natural Gas Prices Drift Lower Ahead Of Weekend
U.S. spot natural gas prices drifted lower Friday, led by an early
slump on NYMEX and forecasts for warmer-than-normal weather at least
through the middle of next week, industry sources said.
Cash prices at Henry Hub were quoted at $1.79-1.83 per mmBtu,
compared with Thursday's levels of $1.83-1.86.
In the Midcontinent, prices on Panhandle, NGPL and ANR settled in the
mid- to high-$1.70s, while Northern at Demarcation gas traded at
$1.79-1.84 and Chicago city-gate was assessed in the high-$1.80s.
In the East, Appalachian prices on Columbia Gas eased to the mid-
$1.90s, as above-normal temperatures were forecast for the region
this weekend.
New York city prices on Transco were quoted at $2.05-2.10.
In the west Texas markets, both Permian and San Juan prices slipped
about two cents to trade mostly at $1.69-1.70, while Southern
California border prices were seen at $1.86-1.90.
An outage at El Paso's Lincoln Station, which has been reducing the
San Juan Crossover capacity by about 90 million cubic feet per day
(mmcfd), is scheduled to end today.
El Paso also reported the outage at the Blanco C turbine, which is
expected to have a minimal impact on capacity, will be Feb. 22-23.
Also, the Roswell 1 Station will be down Feb. 1 and Feb. 2, which
will likely reduce capacity of the San Juan Crossover by about 30
mmcfd, El Paso said.
Variable weather forecasts show most temperatures averaging a few
degrees above normal early next week, except in the west, where
temperatures are expected to be two to 12 degrees below normal.
Temperature highs are forecast to be in the mid-30s in the Chicago
area Monday through Thursday, while New York is expected to see highs
in the low- to mid-40s and the Southern Plains are forecast to reach
into the 50s, Weather Services Corp. reported.
Most forecasts show the cold front moving in the East by late next
week.
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01/22 U.S. Spot Natural Gas Prices - January 22
JANUARY ($/mmBtu) 1/22 1/21
U.S. GULF OFFSHORE 1.68/1.73 1.72/1.77
TEXAS COAST 1.71/1.76 1.74/1.79
WESTERN TEXAS 1.67/1.72 1.70/1.75
LOUISIANA COAST 1.74/1.79 1.78/1.83
NORTHERN LOUISIANA 1.76/1.81 1.80/1.85
OKLAHOMA 1.74/1.79 1.75/1.80
APPALACHIA 1.91/1.96 1.95/2.00
SO. CALIFORNIA BORDER 1.85/1.90 1.87/1.92
HENRY HUB 1.80/1.83 1.83/1.86
WAHA HUB 1.70/1.75 1.72/1.77
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Canadian Spot Natural Gas Prices Ease With Weaker NYMEX
Canadian spot natural gas prices were mostly lower Friday due to
ample storage supplies, a slight drop in export demand and a decline
on NYMEX, market sources said.
As a result, the value of spot gas at the AECO storage hub in Alberta
was quoted another two cents lower at C$2.31-2.32 per gigajoule (GJ).
''People are accessing storage, and NYMEX was off,'' one Calgary-
based trader said, adding demand at both the Empress and McNeill
borders were down about 50-60 million cubic feet per day.
The forward market also responded to the early slump in natural gas
futures, with the February contract posting a low of US$1.79.
AECO forwards: 1/22/99 Previous
February '99 C$2.315-2.325 C$2.35-2.36
Jul/Aug '99 C$2.320-2.330 C$2.35-2.36
Temperatures in southern Alberta are expected to fall to a high of
about minus 16 degrees Celsius on Saturday and then turn colder
Sunday and continue through next week.
At Station 2, B.C., deals were reported done at C$2.38-2.39 per GJ.
At the export points, Sumas, Wash., prices were quoted mostly steady
at US$1.72-1.76 per million British thermal units (mmBtu).
Prices at Niagara in southern Ontario, meanwhile, were about one to
two cents lower at US$1.97-2.00 per mmBtu.
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Canadian Gas Association Storage Survey Week Ending Jan 15
Canadian Natural Gas Stocks Fall 9.0 Pct To 361.27 Bcf
Canadian Gas Association (CGA) weekly survey of Canadian natural gas
in storage in billion cubic feet (bcf) for the week ended Jan 15:
Pct Full Pct Full
01/15/99 01/08/99 Pct Full Week Ago Year Ago
East 166.02 191.69 68.3 78.9 61.6
West 195.25 205.49 70.3 74.0 53.9
Total Canada 361.27 397.18 69.4 76.3 57.5
East-West division is the Manitoba/Saskatchewan and North Dakota /
Minnesota borders.
East capacity 01/15/99: 243.06 bcf, 01/08/99: 243.06 bcf.
West capacity 01/15/99 277.62 bcf, 01/08/99: 277.62 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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Canadian Spot Natural Gas Export Prices - Jan 22
EXPORT (JAN SWING) $CDN/GJ $US/MMBTU
HUNTINGDON B.C. 2.42/2.48 1.71/1.76
KINGSGATE B.C. (TO PNW) 2.36/2.42 1.67/1.72
MONCHY SASK 2.33/2.40 N 1.65/1.70 N
EMERSON MAN 2.50/2.57 1.77/1.82
NIAGARA ONT 2.77/2.84 1.96/2.01
Canada/U.S. dollar conversion based on Bank of Canada rate.
N equals Notional
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Canadian Spot Natural Gas Domestic Prices - Jan 22
DOMESTIC (JAN SWING) $CDN/GJ $US/MMBTU
ALBERTA PLANT-GATE 2.17/2.22 1.54/1.57
ALBERTA BORDER - EMPRESS 2.32/2.37 1.64/1.68
STATION 2, B.C. 2.36/2.41 1.67/1.70
SASK. PLANT-GATE 2.17/2.22 1.54/1.57
TORONTO CITY-GATE 2.72/2.78 1.93/1.98
1-YR PCKGS - EMPRESS 2.64/2.69 1.88/1.92
AECO 2.29/2.34 1.62/1.66
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.
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Crude oil
01/22 Petro-Canada <PCA.TO> raises heavy oil price
COMPANY EFF DATE BOW RIVER HARDISTY MEDIUM,
(CDLR/M3) BLEND MEDIUM** CROMER
IMPERIAL 01/22/98 96.00 -- 105.00
SHELL CANADA 01/20/98 -- 85.00 91.00
SUNCOR 01/22/98 -- -- 103.00
PETRO-CANADA 01/22/98 -- 93.00* --
KOCH OIL 01/20/98 85.00 89.00 93.00
Bow River Blend, Hardisty.....Stream Quality
Hardisty Medium...............29.3 API, 1.6 pct sulphur
*Petro-Can Hardisty Medium....25.7 API, 2.1 pct sulphur
Medium at Cromer, Man.........29.3 API, 2.0 pct sulphur
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01/22 Petro-Canada <PCA.TO> raises light oil prices
COMPANY EFF DATE LT SWEET LT SOUR
CDLR/BBL CDLR/M3 CDLR/BBL CDLR/M3
IMPERIAL OIL 01/22/98 18.28 115.00 17.97 113.00
SHELL CANADA 01/20/98 16.38 103.00 15.90 100.00
SUNCOR* 01/22/98 18.44 116.00 17.81 112.00
PETRO-CANADA 01/22/98 17.97 113.00 17.65 111.00
KOCH OIL 01/20/98 16.69 105.00 16.38 103.00
Light sweet marker crude
at Edmonton/Swan Hills......40 API, 0.3 pct sulphur
Light sour at Cromer, Man....33 API, 1.1 pct sulphur
*Suncor light sour...........35 API, 1.2 pct sulphur
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