Stout gains in the Rockies and Northeast were enough to pull weekly natural gas prices for the abbreviated three-day holiday trading week ended Nov. 25 into the black. Most points traded within a nickel of unchanged, and the NGI Weekly Spot Gas Average added 2 cents to $2.09.
For the short period the most actively traded market point showing a gain was Tennessee Zone 6 200 L with an advance of 82 cents to average $3.24. The weeks actively traded greatest loser was PG&E Citygate with a drop of 16 cents to $2.65.
Most regions showed losses. The Midcontinent shed a nickel to $2.05, and California and the Midwest both eased 2 cents to $2.39 and $2.16, respectively.
South Louisiana, East Texas and South Texas were all spotted a penny lower at $2.06, $2.05, and $2.05, respectively.
The Rocky Mountains added 7 cents to $2.19 and the Northeast rose 8 cents to average $1.93 as winter cold began to make an appearance.
After rising 6.1 cents for the short week December futures expired Wednesday at $2.206, up 17.3 cents from the expiration of the November contract.
Weather forecasts jockeyed for traders' attention throughout the week, but the primary price driver Wednesday was the noon EST release of storage data by the Energy Information Administration (EIA). Natural gas futures staged a counterintuitive rally after a 9 Bcf storage build for the week ending Nov. 20 that was slightly larger than what traders were expecting.
The addition put inventories at a new record level of 4,009 Bcf and surpassed the previous record set last week at 4,000 Bcf. Despite traders being unaccustomed to a storage build this late in November, the expiring December futures rose to a high of $2.235, and by 10:45 a.m., December was trading at $2.21, up 2.1 cents from Tuesday's settlement.
Prior to the release of the EIA data, analysts' estimates were well dispersed. IAF Advisors was looking for an increase of 10 Bcf, and a Reuters poll of 18 traders and analysts showed a range from -4 Bcf to 11 Bcf, with an average 5 Bcf expectation. Ritterbusch and Associates calculated a 2 Bcf withdrawal.
Genscape Inc., a Louisville, KY-based industry consultant with access to a wide range of both power and gas data nailed the report with a 9 Bcf estimate.
"I'm not sure why that would be, but we actually rallied off the number. Traders were expecting a 5 Bcf build," said a New York floor trader. "I think people had [December] positions they wanted to settle up and did so regardless of the number."
"While the 9 Bcf net injection was slightly above the consensus for a 5-7 Bcf gain, this was not a material miss," said Tim Evans of Citi Futures Perspective. "Overall, we don't see this number as changing anyone's view of the intermediate-term prospects, with the upside still limited by a lack of intense cold."
Inventories now stand at 4,009 Bcf and are 554 Bcf greater than last year and 252 Bcf more than the five-year average. In the East Region, 1 Bcf was injected, and the Midwest Region saw inventories increase by 3 Bcf. Stocks in the Mountain Producing Region were unchanged, and the Pacific Region was also flat. The South Central Region, closely similar to the former Producing Region, added 5 Bcf.
The new five-region format is designed to further enhance market transparency and acknowledge a new market configuration featuring the a newly formatted East Region along with four others (see Daily GPI, Sept. 30).
Physical natural gas for the Thursday through Monday flow continued to work lower ahead of the Thanksgiving holiday with gains at a few New England points unable to offset broad losses, not only in the East, but in producing zones and other market areas.
The NGI National Spot Gas Average fell 11 cents to $1.98. Futures had to settle for a mixed close with the December contract expiring at $2.206, up six-tenths of a penny and January finishing at $2.299, down 2.5 cents. January crude oil closed up 17 cents at $43.04/bbl.
Prices in the Mid-Atlantic fell as forecasts called for a mild temperature regime into the weekend. Forecaster Wunderground.com predicted New York City's Wednesday high of 50 would jump to 61 on Thursday and Friday. The normal high in late November is 50. Boston was expected to see its Wednesday high of 44 rise to 53 by Thursday and 60 by Friday. The normal high in Boston is 48.
Thursday through Monday, gas at Tetco M-3 Delivery fell 15 cents to $1.44 and gas bound for New York City on Transco Zone 6 dropped 27 cents to $1.74.
Marcellus points were hard hit. Gas on Dominion South shed 14 cents to $1.33, and deliveries to Tennessee Zone 4 Marcellus came in 47 cents lower at 93 cents. Transco Leidy packages were quoted at $1.18, down 25 cents.
Quotes at Northeast points managed a gain as Algonquin Gas Transmission (AGT) reported reduced flows.
"AGT has scheduled and sealed nominations sourced from points west of its Southeast Compressor Station (Southeast) for delivery east of Southeast," AGT stated. "No increases in nominations sourced west of Southeast for delivery east of Southeast, except for Primary Firm No-Notice nominations, will be accepted." AGT also reported reduced flows at its Beverly meter station on its website.
Gas at the Algonquin Citygate added 38 cents to $2.62, and gas on Tennessee Zone 6 200 L gained 42 cents to $2.96.
Weather forecasts Tuesday overnight had changed little and still favored a lack of any significant cooling. In its Wednesday morning report, Commodity Weather Group President Matt Rogers said the "overall forecast view is same to warmer [Wednesday] with slightly higher adjustments for the Midwest to East and even a bit toward the West Coast in the six-10 day. The 11-15 day is fairly similar to yesterday too with the warmest anomalies setting up from Chicago to Calgary in a classic El Nino pattern story.
"Cooler conditions linger for the interior West to Texas, but the lack of a significant cold air connection by the 6-15 day means that the cooling should be relatively weak and probably more focused on high temperatures," he said.
Tuesday a Houston pipeline veteran said there were "no surprises" in the physical market and they were moving gas like they normally do. As far as December bid week he said people were doing nothing out of the ordinary. Marketers were looking at the weather forecasts, calculating the degree-days, figuring their load, and buying what they need. "These people aren't paid to take risks," he said.
Futures traders were standing aside the market waiting for an opportunity to sell. "As the shoulder period winds down, this market will become increasingly sensitive to the daily updates to the one- to two-week weather views in the process of boosting volatility," said Jim Ritterbusch of Ritterbusch and Associates in closing comments to clients Monday. "But while conceding to a new and lower trading range that was forced by Friday's gap down into new low territory, we are still having difficulty building a case for sub $2 futures pricing especially with the upcoming rollover to the much higher priced January contract.
"December futures expire on Wednesday following an early release of the EIA storage report. We will be looking for a slight withdrawal of 2 Bcf that would compare with the five-year average decline of about 36 Bcf. By and large, we are still sidelined as risk/reward ratios appear unfavorable at current price levels. And although our preferred rally to the $2.60 level per the January contract may prove to be out of reach, we will await an advance of at least 15-20 cents from current levels before re-establishing a short position. Regardless, this remains a market that should be worked strictly from the short side."