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Most Points Fall; Despite Nymex Move, Cash 'Business as Usual' Tuesday

The January aftermarket got off to a weak start with declines at a solid majority of points as bearish weather is expected to extend through at least mid-January. Losses ranged from a couple of pennies to about 45 cents.

Blizzard conditions were extending from the Rockies into the western Plains Friday, but most of the East was expected to continue seeing above-normal temperatures for the most part through early this week. However, upstate New York and New England could see freezing rain around New Year's Day, The Weather Channel said.

Friday's trading was for Monday-Tuesday flows because of the holiday weekend transition to a new month. Friday-Sunday gas was covered in Thursday's deals.

Sources said that although Nymex will suspend its normal open-outcry session Tuesday in observance of the national day of mourning for former President Gerald Ford (see futures story), it will be "business as usual" in the cash market that day. There will still be energy futures trading opportunities available through the CME Globex and IntercontinentalExchange electronic platforms.

The Energy Information Administration fell short of most expectations in reporting a 46 Bcf storage withdrawal for the week ending Dec. 22. Prior estimates had been more wide-ranging than usual in running from 50 Bcf to 70 Bcf for the most part. After a little hesitation February natural gas futures gave a moderately bullish response by moving 5.1 cents higher on the day.

Southern Natural Gas extended a Type 6 OFO for long imbalances through Saturday and said it was highly likely that the extension would run through Sunday, but the pipeline considered it "too close to call" on whether the order would still be in effect Monday. That was the only OFO in place as 2006 came to a close, although the three Duke Energy interstate pipelines (Texas Eastern, Algonquin and East Tennessee) continued to warn shippers that no due-pipe imbalance make-up nominations are being accepted until further notice.

Over in the West, Kern River was reporting low linepack systemwide Friday, and although Westcoast said excess linepack issues were easing, it continued a zero pack/20% draft imbalance tolerance range through at least Saturday.

"Everybody will be in [Tuesday] and nobody will shut down" trading in the cash market despite the absence of normal Nymex floor activity, a Calgary-based producer said. He wasn't aware of anyone trying to reconfigure earlier deals for flow through Wednesday following Nymex's mid-morning announcement. "It will be business as usual Tuesday" and Globex futures trading will be available, the producer added. "They [Nymex] needed to get their act together Thursday," he said; in that case cash traders might have agreed to make deals Friday that would have covered deliveries through Wednesday.

Not surprisingly, the producer found it to have been "a little thinner bidweek than usual" with quite a few counterparties being out for the holidays. January prices fell consistently each day, he said, but since most trading got done early, indexes will tend to be near the high end of their ranges.

A western marketer agreed that "we'll all be in Tuesday" and retrading spot gas for Wednesday. A lot of deals got done on the IntercontinentalExchange electronic platform and thus were already contractually set for Monday-Tuesday only, he said. However, with no open-outcry trading going on at Nymex, activity in the physical market should be light Tuesday, he said. He also agreed with the producer that if Nymex had announced its outage on Thursday, cash traders might have extended Friday's deals through Wednesday.

The market was very quiet Friday with a lot of people either already absent or leaving early for the New Year's weekend, the marketer said. Spot prices in the West took sizeable hits despite the ongoing Rockies snowstorm, he added. Stanfield started around $5.75-76 but fell into the high $5.60s in late deals, he said.

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