NYC Quotes Hit $17.50; Non-Northeast Points Soften
The price fires got reignited Thursday in the shivering Northeast, only a day after early-week spikes had appeared to be settling down for the most part. Transco Zone 6-New York City prices topped out at $17.50 in super-volatile trading that saw the same point quoted at less than $9. Other Northeast points saw triple-digit gains in a few cases.
The rest of the market continued to soften, but the losses were considerably smaller than on Wednesday. Declines tended to range from about a nickel to as much as 35 cents, with most around 20 cents or less.
Asked why the Northeast market was soaring again after falling at non-New England points Wednesday, a marketer in the region jested, "If I knew, I would be on a golf course in the Caribbean right now because I would have already made my fortune." More seriously, he continued, "You just can't decipher any consistent pattern in this market." He noted that a lot of people found themselves getting caught short in late deals Wednesday, which set the stage for Thursday's rebound.
"It's all emotion," the marketer went on. There was an element of "panic buying" in Thursday's run-ups, he said, because traders remembered having to pay nearly $40 at Northeast citygates at one point last winter, "so they're buying now in hopes of not having to pay even more later." It's going to get worse and this market's not going to calm down anytime soon "because we have about another 10 days of this kind of weather still to go."
The peak quotes of 2003 occurred on the trade date of Feb. 25 when several Northeast citygates ran as high as $35-38 (see Daily GPI, Feb. 26, 2003). Conditions were somewhat similar at that time in that near-freezing or sub-freezing weather was occupying most of the U.S. and Canada for a fairly sustained length of time. But a major difference was that storage inventories were perceived as being at disturbingly low levels then, while there is currently no worry about potential storage shortfalls. Also, last Feb. 25 the rest of the market was spiking along with the Northeast, with Gulf Coast and Midcontinent/Midwest numbers averaging close to $20 and only California/San Juan/Rockies points failing to surpass $10. Now non-Northeast markets are hanging back in the $5.50-7.00 range.
The storage comfort level was accentuated Thursday morning when the Energy Information Administration reported a 52 Bcf withdrawal for last week, which was below a range of prior expectations that had stretched to about 90 Bcf. In comparison with the year-ago volume of 86 Bcf, the latest report confirmed that the year-on-year surplus is still increasing.
"There was a small draw from the EIA, but not too much effect. I'd imagine it [withdrawal] will be larger next week," an East Coast trader said. "In fact, there was a small injection [1 Bcf] in the Producing Region this time. I guess that means there is plenty of gas in the Gulf Coast. Could producers intentionally keep their fuel off the market to drive up prices? Could be. But I'm guessing they are all eager to make hay while the sun is shining, so to speak."
"Prices were jumping by dollars," said a Gulf Coast producer who also trades the Northeast. "How do you keep an angle when as soon as you finish a deal, you're practically looking at a new market? You want a ceiling? There is no ceiling."
Conditions were moderating in most of the southern tier of states, except for Florida, where pipeline supplier Florida Gas Transmission followed through on Wednesday's warning that an Overage Alert Day might become necessary in its market area. Otherwise frigid weather dominated the national picture from coast to coast. According to The Weather Channel, wind chills ranged from 0 to 40 degrees below zero from northern New York through central and northern New England. "Record cold is likely in New England this weekend," it added. "Boston may see temperatures below zero for the first time since mid-January 1994."
Algonquin was in agreement with TWC, saying in a note to shippers Thursday that the cold front in its service territory was forecast to last into the weekend, with the coldest days expected on Friday and Saturday. Asking for "particular attention" from customers in setting up their business for the weekend, Algonquin reminded them that it would be at peak operating conditions across most of its system and continue to have very limited operating flexibility.
On the other side of the country, a Pacific Northwest LDC buyer reported, "We've been in emergency mode here for nearly a week" due to a series of winter storms, but she thought the region was starting to get a break in the weather.
Another sign of some moderation of market conditions was that El Paso and Sonat ended OFOs or similar restrictions (see Transportation Notes).
A Reuters news story said forecasting services AccuWeather and EarthSat predict that the Northeast will get a brief reprieve early next week from the current siege of severe weather, but then another arctic blast will move in. "There's no doubt that we'll see temperatures climb into the 40s in Boston early next week, but it will quickly return to ferocious cold," the story quoted AccuWeather forecaster Joe Bastardi as saying. "We're in a pattern that is bringing cold temperatures comparable to 1996," he added, referring to a year of record snow in the Northeast.