As the country approaches the traditional shoulder months of September and October that separate the peak for gas consumption (due to summer cooling loads) from the peak consumption of the winter heating season, several fundamental aspects of the short-term natural gas market remain overtly observable and eloquently simple – underground storage and domestic gas supply remain strong, while large-volume natural gas demand continues to trail recent years.
At the same time, acquisition prices have been ruled by the law of the prevailing market fundamentals for virtually all of 2009 and even with price fluctuations in the world oil complex have not been significantly diverted from their current path. Beyond that there are observations of interest that can be made by those trying to uncover the vagaries of today’s natural gas market complexity.
For example, instances where LNG imports have probably limited localized price volatility may have occurred this year. In one case, send out from the Canaport terminal in New Brunswick may have helped keep prices down in the U.S. northeast despite a 20 day outage at Sable Island, which supplies the Maritimes & Northeast Pipeline. In another case, increased send out from Gulf of Mexico terminals was partially responsible for limiting the impact of an offshore compressor accident that led to a force majeure on the High Island Offshore System earlier this summer.
To be sure, the overall strong supply position around the country probably had much to do with limiting any price increases in the aforementioned regions, however, these two events at least suggest that the existence of underused LNG capacity may limit upside price volatility in some cases.
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