The cash market began running out of steam Thursday after a couple of days of somewhat surprising bullish trading. Even with a slight cooling trend starting Friday in the Northeast and support from a January futures gain of nearly a quarter Wednesday, cash numbers were in retreat at most points Thursday.
A lot of flat points combined with losses that ran nearly as high as a dollar. Rockies points were the clear leaders in the downhill charge. Questar failed to register any quotes of $4 or more, and the rest of the Rockies market traded not far above the $4 level.
El Paso-San Juan's Bondad pool again was far out of sync with the rest of the market. After a plunge of more than 80 cents Wednesday while most of the market was firmer, Bondad rebounded spectacularly by about $1.30 Thursday. Otherwise, Thursday's minority gains ranged from about a nickel to a quarter.
Unusually moderate mid-December weather in most areas was the obvious instigator of Thursday's softness. The big question for some traders was why it hadn't asserted itself as more of a market influence in the previous two days.
Western traders were at a loss to explain Bondad's odd behavior, although one suggested that minor transport constraints on El Paso might have been a factor. He was puzzled because the impact on Bondad seemed out of proportion with the magnitude of the constraints.
"I have no idea about what's going on at Bondad," said a Southwest utility buyer. He noted that as long as regional weather stays mild, "we're in really good shape" on gas supply.
The Energy Information Administration exceeded consensus expectations of a storage pull in the mid to high 150s Bcf when it estimated a withdrawal of 168 Bcf for the week ending Dec. 8. It was essentially greeted with a shrug at Nymex, though, where an initial bullish reaction gave way to a drop of 11.8 cents on the day for the January contract.
A fierce storm bringing snow to higher elevations of the Pacific Northwest was one of the few remaining bastions of significant heating load. Otherwise, temperatures ranging from five to 25 degrees above seasonal norms dominated the rest of the weather picture.
A Calgary-based producer confirmed that it was unusual for his area to be seeing thermometers above zero degrees Celsius in mid-December, although he said conditions would return to below freezing over the weekend. He confessed that he "was quite shocked" by the price gains of Tuesday and Wednesday in the face of weak weather demand. NOVA Inventory Transfer (NIT) quotes were up at first, he said, but later came back to around flat. NIT basis from Henry Hub has weakened considerably in the last two days, he said, from 40 cents back to about 60 cents Thursday (adjusted for currency differences).
Noting the initially bullish Nymex reaction to the storage report, he said he was glad that "people finally returned to their senses" in sending the screen lower.
Temperatures in the Northeast are quite mild currently and expected to stay unseasonably warm for the next seven to 10 days, a marketer in the region said. For that reason he anticipates "anemic cash values" through at least Christmas. Power generation demand was helping to boost Northeast prices Tuesday and Wednesday, but that's slipping away now, he said.
When it's reaching nearly 60 degrees in New York City during December, you know you've got a weak market, he continued. There are no transportation constraints of any significance, he said, so it looks like the market is settling in for a period pretty quiet activity, which is not unusual for the holiday season when many traders are taking end-of-year vacations.
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