Sabine Pass feedgas volumes increased to 50 MMcf/d on Thursday, its strongest level in 33 days and a likely confirmation of the maintenance operation being completed. Feedgas deliveries increased by 10 MMcf/d from gas day 19, and today marks the seventh day in a row with deliveries to the LNG facility, averaging 25 MMcf/d over that span. Despite deliveries increasing over the past few days, feedgas is still well below the 1.2 Bcf/d average seen over the first two weeks of September before Sabine Pass began to ramp down for the four week modification to the train 1 & 2 flare. Sabine Pass exported two cargos during the maintenance, including the 3.4 Bcf/d Marin Gas Sparta which was chartered to Manzanillo, Mexico. Total demand in the Southeast has fallen 4 Bcf/d from the first two weeks of September to its current 14 day average, near the lows of the year.
US dry gas production averaged 70.6 Bcf/d for the week ended October 21, relatively flat from the prior week's average of 70.4 Bcf/d. The maintenance on Alliance pipeline ended on October 21, causing Canadian imports in the Midwest to surge 1.2 Bcf/d. Week on week, imports from Canada declined by 0.6 Bcf/d. Given offsetting moves from production and imports from Canada, total US supply only declined by 0.2 Bcf/d. Warm temperatures blanketed the more densely populated and demand-heavy East Coast this week; average daily temperatures in New York City peaked at 77 degrees on October 19, which is a massive 20 degrees above the historic norm. Power demand on the US level responded by peaking to 29.6 Bcf/d on Thursday, where the weekly change was for 1 Bcf/d, while residential/commercial demand fell by 1.5 Bcf/d. Exports to Mexico remained flat week on week, as well as LNG feedgas. The rough four week timeline for Sabine Pass' maintenance has come and gone, while nominations have slowly crept up throughout this week, indicating that a startup this weekend or next week could be likely. Temperatures are forecast to cool by roughly 6 degrees into next week, which could add as much as 3.7 Bcf/d of upside for US residential/commercial demand.
Thursday’s Daily Canadian Observer discussed a strengthening in December Dawn futures from November futures. This is possibly due to the additional demand Dawn is set to undergo in December, as 644 MMcf/d of contracts to use AECO gas to meet East Canadian demand will change the delivery point from AECO to Dawn when TransCanada completes work at the Maple compressor (scheduled for late-November). The AECO market also may be expecting a similar shift in market dynamics, as November futures basis is trading at minus 80 cents, and then basis sharply weakens to minus 98 cents in December and then averages minus $1.01 for the remainder of the winter strip. Over the past five years, November AECO basis has traded within 8 cents of December. An 18 cent drop from November to December could be due to Empress losing 644 MMcf/d of contracts to take gas to East Canada at the end of November.