Natural gas for Thursday delivery rose at nearly every market point in Wednesday's exchanges as pronounced trends toward cooler temperatures, along with rising power loads, kept a firm bid under the market.
New England points scored gains of 50 cents or more to lead the pack, but the overall market advance was just 8 cents to average $3.54. Only a few isolated Mid-Atlantic and Marcellus points endured losses.
Futures traders were willing to acknowledge a supportive post-Christmas temperature outlook and at the close, January had added 8.3 cents to $3.702 and February had risen 8.9 cents to $3.724. January crude oil advanced 54 cents to $56.47/bbl.
At eastern points, next-day gas rose as peak power for Thursday delivery gained ground. IntercontinentalExchange reported that next-day peak power at the ISO New England's Massachusetts Hub rose $3.23 to $43.84/MWh, and deliveries to the PJM West terminal added $2.15 to $40.26/MWh. Peak power at New York ISO Zone G (eastern New York) rose $3.41 to $42.50/MWh.
Gas for Thursday at the Algonquin Citygates rose 70 cents to $5.02, and packages on Iroquois Waddington gained 13 cents to $4.04. Gas on Tennessee Zone 6 200 L rose 57 cents to $4.82.
Next-day deliveries for gas bound for New York City on Transco Zone 6 gained 12 cents to $3.72. Gas on Tetco M-3 was one of the few points in the red falling 11 cents to $2.92.
Eastern power loads were also forecast higher for Thursday. The New York ISO predicted peak power for New York City Wednesday of 6,863 MW would rise to 6,932 MW Thursday and ease to 6,910 MW Friday. The PJM Interconnection forecast peak power Wednesday of 37,991 MW would climb to 39,462 MW Thursday and see 39,017 MW Friday.
Gas for Thursday delivery at Marcellus and Appalachian points gained a few pennies. Gas on Transco Leidy added 4 cents to $1.97, and deliveries to Tennessee Zone 4 Marcellus were seen 5 cents higher at $1.96. Gas on Dominion South eased 5 cents to $2.44.
A forecast cooling trend in the Northeast also sharpened buyers resolve. Forecaster Wunderground.com predicted the high Wednesday of 49 in Boston would fall to 44 Thursday and 34 Friday. The normal high this time of year is 41. Albany, NY's Wednesday high of 43 was seen falling to 37 Thursday and reaching 32 by Friday. The seasonal high in Albany is 35. Baltimore’s high Wednesday of 52 was predicted to slide to 42 Thursday and 43 on Friday, 2 degrees below normal.
Forecasters in the Mid-Atlantic called for weak storms with light snow into the weekend before the arrival of major cold on Christmas Eve.
"After a weak storm brings spotty light snow and rain to the region this weekend, a storm will threaten major travel disruptions around Philadelphia before Christmas," said AccuWeather.com meteorologist Alex Sosnowski.
"A major storm is forecast to affect the Central and Eastern states on Christmas Eve with the potential for major travel disruptions. The storm is forecast to bring strong winds and drenching rain to the Atlantic Seaboard, but there will be snow and increasing wind for the Midwest. The ups and downs of temperatures this December will continue through the storm around Christmas Eve, before colder air settles and becomes more persistent for the end of 2014."
Midcontinent market points were firm. Gas on Northern Natural Ventura for Thursday rose 10 cents to $3.78, and Demarcation next-day deliveries changed hands at $3.78 also, up 13 cents. At the NGPL Midcontinent Pool, next-day gas added 4 cents to $3.51, and OGT Thursday parcels came in at $3.48, up 3 cents. Gas on Panhandle Eastern gained a nickel to $3.54.
Traders Thursday will get an idea of just what impact recent mild weather has had on gas usage with the Energy Information Administration’s (EIA) weekly storage report. Expectations are the year-on-year deficit will be erased, and a big dent will be made in the five-year deficit. Last year 256 Bcf was withdrawn and the five-year pace stands at 157 Bcf.
ICAP Energy expects a withdrawal of 63 Bcf and IAF Advisors is looking for a pull of 61 BCf. A Reuters poll of 24 traders and analysts showed a 60 Bcf average with a range of 52 Bcf to 78 Bcf.
Forecasters remain adamant in their call for cold next week, and how that develops could have ramifications for supply-demand balances going forward. Natgasweather.com in a Wednesday report said that "while national eight-14 day outlook maps continue to shed warm colors in favor of cooler ones…
“The next two weekly EIA reports will be woefully lighter than the five-year average, which is clearly bearish, as it will allow deficits to make up significant ground. Although, weather patterns are convincingly looking much colder for the last week of December, even with the data remaining inconsistent on exactly which areas will be hit hardest and for how long.
"This could be causing the markets to wait on more certain heating demand numbers for the important Christmas Eve through New Year's Day period. We continue to believe how the Christmas Eve winter storm plays out could be important to prices as colder temperatures and accumulating snowfall looks fairly certain for the Great Lakes and Northeast. This storm will bring stronger heating demand, but the truly cold Canadian air may not arrive until just after Christmas."
Natgasweather.com forecasters are trying to resolve whether the cold weather will resemble a phalanx, a broad methodical sweep across the country from west to east, or will it resemble a dagger aimed at Dixie and the East. "Simply put, it will be gradually getting much colder across the U.S. beginning next week, leading to increasing bullish weather sentiment, but with many details still needing to be resolved," they said.
If this weather scenario doesn't materialize as forecast, the resulting market landscape could be significantly changed. BNP Paribas’ Teri Viswanath, director of natural gas commodity strategy, said that if persistent cold weather is absent for the remainder of the season, "an unmanageable level of end-of-season inventories will accrue."