Most Points Moderately Firmer; Northeast Keeps Diving
The cash market broke out of a lengthy pattern of volatile price movement for the most part Wednesday. Except for plunges of 60 cents to nearly two dollars in the Northeast, the rest of the market tended to range from slightly softer to 20 cents higher. A majority of the gains were less than a dime.
The Midwest, which is getting socked a bit harder by very cold weather than it was last week, saw most of the larger advances in the teens. Conversely, the Northeast is having an easier time of it than it did a week earlier, and so its numbers were on a downhill slide. However, Northeast citygates still led the overall price pack handily by averaging more than $7.
"Prices had been flip-flopping a lot recently, but they settled down to nickel and dime changes" Wednesday, a Houston-based trader commented. Despite the continuing siege of frigid temperatures in the North, he was not aware of any significant supply or transportation cuts, and said demand was "not all that strong."
A Southwest marketer agreed that the modest show of price strength was somewhat illusory, saying prices were going down rapidly near the end of trading, which usually portends softness on the following day. As an example, her Waha quotes began in the mid $5.70s but were about 20 cents lower in late deals. "It was hard to find markets at the end," she said, adding, "It was not fun."
One source speculated that cold-weather demand might be somewhat suppressed due to northern utilities turning more to their storage inventories following the previous week's report of an unexpectedly low withdrawal. He also noted that again the southern third of the U.S. remains largely insulated from the severe cold, with highs in most of the South expected to range from the 50s through the 60s Thursday.
A marketer found it rather curious that Northern Natural Gas was keeping a System Overrun Limitation notice (indicating a shortfall in linepack due to heavy market-area demand) in place through at least Thursday, but at the same time its bulletin board was announcing operational sales of up to 100,000 MMBtu/d each at demarc and Ventura for both Thursday's and Friday's gas days.
A Florida utility buyer reported picking up a Florida Gas Transmission Zone 2 package in the mid $6.20s, but said the company was in "more of an oil-burning mode because of the high gas prices." Reminded that February crude futures had gone off the board at $36/bbl-plus Tuesday and March crude was trading at more than $34.50 Wednesday, the buyer said that was unlikely to wean them off fuel oil because their supply had been hedged.
Lehman Brothers analyst Thomas Driscoll estimated that the EIA's Thursday morning storage report will feature a withdrawal of 175 Bcf for the week ending Jan. 16. Stephen Smith of Stephen Smith Associates has pegged it at 197 Bcf.
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