Some Flatness Mixed into Continuing Softening
Despite indications that severe cold might linger in the Northeast and become more entrenched in the Midwest, prices continued to fall throughout most of the cash market Thursday. But several points -- mostly in the Rockies -- were flat to up slightly, and Westcoast Station 2 managed a gain of nearly C20 cents despite the pipeline's imbalance tolerances continuing to encourage maximum drafting.
Northeast citygates once again had the largest losses of up to about 35 cents, but they were considerably smaller than Wednesday's declines. The rest of Thursday's drops tended to range from a little less than a nickel to about a quarter.
Another cold snap is forecast over most of the East around Sunday, with temperatures in the South expected to be even colder than those early this week, according to The Weather Channel (TWC). The Midwest will feel the brunt of the frigid attack first as an arctic cold front is due to be invading the region Saturday. However, TWC added that Southern temperatures will rebound rapidly to normal or above normal by the middle of next week.
The Energy Information Administration tossed a little bearish information the market's way with its report of a 61 Bcf storage withdrawal for the week ended Dec. 10. The volume was close to the lower end of prior expectations but apparently was already factored into market perceptions, as the already weaker screen took an initial dip after the storage report, then came back up to near where it started, one source noted. The eventual settlement, down 23.6 cents to an even $7.00, likely will temper any price support Friday from the weekend cold, he said.
A Midcontinent/Midwest marketer said he was "hearing all that talk" about even colder weather than what started this week coming over the weekend and early next week, but added that he was sort of like a fan of the Jerry Maguire movie. In other words, "Show me the weather!" The weather people "keep talking a good game" on their predictions but can't always back it up, he said. Regardless, he thinks the forecasts will make prices go up Friday, but suspects that it will be based more on "hype" than substance.
Why is anybody worried about winter supplies, the marketer wondered. After all, the industry is already half-way into December and just starting to nibble at storage. "All the cold we keep talking about is in the forecasts and not actuality at this point," he commented. The market hasn't experienced any cold weather significantly below normal; "all we've seen so far" is no worse than normal, he said. However, he noted that along with OFO-like postings by several pipelines or cautionary warnings of potential ones, the Mid-American utility in Iowa was saying that as of Sunday its system will be on a "Warning Day Status."
A lot of buyers have already completed their January RFPs (requests for proposals), the marketer said, so between that and the usual holiday absences among the trading community, he expects the January bidweek to be "very slim" on liquidity again.
Minerals Management Service said there was no change Thursday in Hurricane Ivan-related Gulf of Mexico shut-ins from the week-earlier figure of 594.29 MMcf/d. MMS is changing from twice-a-week shut-in reports to ones released every two weeks, meaning that the next two reports will be on Jan. 3 and Jan. 17.
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