cera monthly briefing supply anxiety cera alert cera monthly forecast predicting october differentials chicago 11 forwarded lorna brennan et enron 09 18 2000 02 06 pm webmaster cera com 09 15 2000 10 33 24 pm lorna brennan enron com cc subject cera monthly briefing supply anxiety cera alert cera alert sent fri september 15 2000 title cera monthly briefing supply anxiety author n american natural gas team e mail category alert product line north american gas url http www cera com cfm track eprofile cfm u 5526 1357 alternative url heating season approaches high justified level anxiety regarding winter supplies driving gas market things stand market headed winter exposed supply shortfall late winter even normal weather conditions prospect placed floor gas price price residual fuel oil priced mid upper 4 00 range gas prices moving range would begin attract demand back market diverting supplies storage increasing supply concerns upside little demand response price industrial demand lessens price distillate oil writing near 7 00 per million british thermal units mmbtu breached however distillate markets extremely tight prices fuel would likely follow gas prices within range prices defined mainly supply anxiety market judgment likelihood supply shortfall would characterized extreme pricing volatility difficult process supply allocation price exposure extreme price volatility winter certain although cera expects storage injections increase approximately 2 0 billion cubic feet bcf per day august september increase would still leave inventories record lows month next even increase injections occur tropical storm forces evacuation offshore platforms hot weather returns october heating load enters picture us supplies running close year earlier levels imports slightly higher demand priced market remain key reason storage injections increase last year low level result although prices may close month september upper 4 00 per mmbtu high end competitive range resid threat interruption supplies quickly bounce prices upward remainder september october heating season begins therefore cera expects reality supply vulnerability winter result first ever monthly average price 5 00 henry hub see table 1 first potentially many months price gas storage new record lows cera estimates storage inventories united states crossed record low territory end august inventories 2 233 bcf fell previous 1996 record low 2 245 bcf see table 2 records likely broken coming months widening margins injections september expected average 9 5 bcf per day increase 2 0 bcf per day august level last year pace 10 3 bcf per day cera september estimate could exceeded mild weather conditions tropical activity hitting gulf mexico injections would likely fall 9 5 bcf per day rate storm activity force evacuation platforms rate would leave us inventories 2 518 bcf month end record low 87 bcf october cera expects slight increase injection rate last year injections 5 5 bcf per day average year would enabled demand priced market lack unusually cool weather tropical storm activity october injections varied historically 4 0 bcf per day 1989 8 5 bcf per day 1998 even injections reached toward upper end range market would remain exposed shortfalls winter expected injection rate us inventories 2 689 bcf end october would result end march 2001 inventory level 669 bcf normal winter weather 89 bcf previous record low 758 bcf regional markets waiting winter pipeline explosion el paso late august intensified subregional pressures already play western gas markets cuts pipeline flows limited access california pipeline route state excess capacity lack supply pressured prices within supply basins forced strong storage withdrawals california market although summer power loads california ease much el paso capacity restored race improve storage positions onset winter heating load keep intense pressure topock prices differentials rest west strengthen local heating loads begin absorb enough supply ease pipeline bottlenecks see table 3 differentials east traded narrow range summer likely reach slightly higher levels start heating season october however exposure pricing disconnects remain low later year cera outlook region follows rockies pipeline bottlenecks rocky mountains summer begin ease heating loads climb october cera expects local demand limits pressure pipeline capacity differentials narrow october differentials average 0 50 per mmbtu san juan resumption flows el paso southern system combined production outages relieved access constraints san juan supply seasonal declines rockies southwest flows beginning heating season narrow october differentials 0 35 per mmbtu permian mid continent continuing pull supplies west support permian prices midwestern pull supplies support mid continent prices cera expects differential henry hub 0 06 per mmbtu mid continent supplies 0 11 per mmbtu permian supplies chicago delay service date alliance october 2 october 30 take gas chicago market next month delay combined need build midwest storage inventories sustain recent increase differentials 0 05 0 08 range 0 10 per mmbtu cera expects october differentials chicago citygate average 0 11 northeast markets gas prices near 5 00 increased fuel cost delivery gulf coast northeast raising floor level differentials near 0 30 per mmbtu beginning heating season lack new capacity new york citygate support differentials floor october near 0 40 per mmbtu canadian markets outages affect supply outages affected supply thus far september british columbia alberta affected resulting year year decline western canadian supply various problems appear rectified average supply month likely 100 150 million cubic feet mmcf per day september 1999 drilling adversely affected past several weeks wet weather rig utilization beginning climb previous levels 8 400 gas wells expected year slight drop export demand eastern canadian demand still approximately 200 mmcf per day cooler normal weather reducing need air conditioning west however cooler normal weather accounted increase demand heating requirements 200 mmcf per day exports slightly september compared september 1999 pg e gt nw 110 mmcf per day northern border running even september 1999 storage picture brighter canada storage injections eastern canada picked inventories expected reach five year average 210 bcf west inventories end injection season five year level even 1999 250 bcf wider differentials holding widening substantially august us 1 17 aeco henry differential closed back typical level 0 60 september september aeco price average us 4 15 per mmbtu c 5 79 per gigajoule gj increasing october us 4 35 per mmbtu c 6 07 per gj end cera autumn 2000 roundtable event dates agendas available http www cera com event account changes edit personal account information including e mail address etc go http eprofile cera com cfm edit account cfm electronic message attachments contain information cambridge energy research 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