Most Weekend Prices Range From Flat to Down $1-Plus
Slight moderating trends in winter weather, weak futures and lessened industrial load over a weekend combined to send prices lower at nearly all points Friday.
In deals done for Sunday-Monday flow (Friday and Saturday had been lumped together in Thursday's trading to facilitate the month-to-month transition), a few flat points were mixed among declines of a nickel to a little over half a dollar in most of the market. Northeast citygates again recorded dollar-plus drops in their headlong plunge from spikes earlier in the week.
Agua Dulce in South Texas was an anomaly with a gain of about half a dollar. A trader could only speculate that an outage of Tennessee's Agua Dulce meter, which starts Monday and is expected to last about five days (see Daily GPI, Jan. 20), had something to do with the isolated show of price strength.
"I don't remember the last time we saw 30 degrees," said a Northeast trader. "It's 21 degrees here [Friday afternoon], and Saturday is going to be colder. It's been a very cold January. It's good for the gas and oil business, but not so good for people."
A New England utility buyer was thinking along similar lines. "It looks like we've gotten through the worst weather this winter with no problems," she said, adding that she didn't like the high prices it brought and the resulting political uproar, "but at least it's been good for our business" because of the heavy throughput volumes.
One source noted that with Tennessee's lifting of a few restrictions on its 500 Leg in Louisiana, the point's unusual premium of about 30 cents above Henry Hub at midweek was vanishing. Tennessee 500 Leg and the Hub traded at approximate parity around $5.80 Friday.
"We finally got the OAD monkey off our backs," said a Florida utility buyer, referring to Florida Gas Transmission's cancellation of an Overage Alert Day notice that had been in effect since Tuesday (see Transportation Notes). Area temperatures were warming up to highs in the 60s, the buyer added.
Meanwhile, a Midwestern utility buyer on the Northern Natural Gas system was anticipating higher temperatures, but his circumstances were quite different from those in Florida. "Our highs have been in single digits here all week, but I think we're close to warming up into the teens, though," he said. He commented that NNG's System Overrun Limitation, which the pipeline extended through at least Saturday, had been limited to just a couple of market-area zones on a few days in the previous week, but since about last Monday the SOL has been systemwide.
And farther north and west, a producer reported that Calgary was experiencing thermometer reading of minus 20 degrees C. (approximately minus 4 F.) Friday. NOVA was still down about 700-800 MMcf/d in field receipts due to wellhead freezeoffs, he said. Production is gradually coming back up, but he expects some of the more remote wells in the province to still be out this week.
Several sources concurred that bidweek had ended Thursday for all practical purposes, with very little business left to be done Friday. As a result, it was a very quiet trading day Friday. A Gulf Coast producer said a recent trend of doing next-month deals prior to what is normally regarded as the official bidweek (the last five business days of the preceding month) had "ended somewhat. There was very little jumping of the gun this month."
A couple of sources independently reported their perception that the market seemed to be in a longer supply position going into February than it did for January. Barring any return of very severe weather, they expect that to keep a lid on any potential price spikes like the Northeast has seen recently. The Northeast is going to stay cold for a while longer, a marketer said, but its temperatures aren't expected to get as low as in the last couple of weeks.
Citigroup analyst Kyle Cooper's initial estimation for the next storage report looks for a withdrawal in the 210s (Bcf), which would compare with 208 Bcf a year ago and a five-year average of 142 Bcf.