Natural Gas Intelligence
Midwest Prices Soft as SoCal Gains; Futures Wobble to Mixed Close

Friday, November 02, 2012

Cash natural gas prices on average were unchanged Thursday with declines posted at Midwest points and gains at southern California and some eastern locations. The Energy Information Administration reported a build of 65 Bcf, somewhat less than what traders were expecting, but futures markets limped to an uninspired finish. At the close, December had gained 0.7 cent to $3.699 and January had shed 0.2 cent to $3.818. December crude oil gained 85 cents to $87.09/bbl.

Midwest utility buyers said they had procured most of their storage gas and had little interest for the moment in spot deals. "We are just coasting and not buying anything right now," said a Midwest utility buyer. "We've got plenty of gas coming at us for November, so we are OK." He added that during the winter his company would typically not hesitate to use storage gas "for any shortage we may have and not buy on the market. We'll try to keep that down as much as possible."

Early week strength in the Midwest, which sent Chicago Citygate prices close to $4, "was due to short selling," he said. "It looked to me like people were short the whole month of October and were hoping prices would go down, and they didn't. They were waiting for the prices to tank and they didn't. They were still short and had to cover. We had some cold weather early in the month, which caused us to go negative on the pipe."

Going into the report there seemed to be little doubt a new record would be set. Last year at this time, 82 Bcf was injected, and the five-year average stands at 57 Bcf. Estimates were closely bunched. Analysts at Energy Metro Desk (EMD) calculated an increase for the week ended Oct. 26 of 68 Bcf, and a Reuters poll of 23 traders and analysts revealed a sample mean of 67 Bcf with a range of 59-76 Bcf. Bentek Energy was anticipating a build of 68 Bcf.

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