Prices fell at virtually all points Thursday as buyers in key northern market areas looked for warming trends going into the weekend to lighten their loads. Wednesday's 12.4-cent rise by February futures had no effect on stemming the broad-based declines in cash quotes.
A flat Opal prevented an across the board sweep of softness. Otherwise, drops ranged from a little less than a nickel to a little more than 60 cents. The smallest losses occurred at several Rockies points, where severe cold is sticking around (Denver was forecast to see a low of 2 degrees Friday) in sharp contrast to the moderation due in much of the East.
It will be only a brief period of moderation through the Saturday-Sunday portion of the weekend, however. By early next week frigid conditions will have returned in most areas. In a Thursday morning advisory, Weather 2000 said an "arctic air mass [was] entering the High/Northern Plains as we speak; frigid readings will last several days." By Monday 75% of the nation will be below normal again as the air mass expands eastward and southward, the consulting firm added.
The upper West was already in the deep freeze from a winter storm that had passed through the Pacific Northwest, but it is being joined in frigid temperatures in the Midcontinent and Lower Midwest as the storm continues to plod eastward. For example, Omaha expects to experience a low in the teens Friday and a high barely above 20.
The Energy Information Administration was pretty well in line with consensus expectations in reporting a 49 Bcf withdrawal from storage during the week ending Jan. 5. The volume had been well factored into the futures market ahead of time (see futures story), but because it lagged the five-year average draw of 102 Bcf by so much, Nymex traders sent the February contract 46.3 cents lower Thursday, although they largely waited until the afternoon to do so.
Conventional wisdom says prices will go down further Friday, especially after the futures plunge of nearly half a dollar and with the extra loss of industrial load over a holiday weekend, a Gulf Coast producer commented. "But you never know," he added. The long weekend will cause Friday's deals to cover flows through Monday and Tuesday, and very cold weather is forecast to have returned by then to much of the major market areas, he said, so it's hard to tell whether the added demand of that period will allow much of a cash price decline.
The producer said customers in the Mid-Atlantic and Ohio Valley were telling him they're expecting about five days of severe cold, some starting Monday and the ones farther east on Tuesday. In the near term it looks like an off-and-on pattern of cold spells is developing he said.
Calling it a "pretty boring market right now," he said his company had noticed a significant pickup in demand in Florida Gas Zones 2 and 3 because of the Thursday-Friday suspension of Zone 1 nominations (see Daily GPI, Jan. 11). That won't be a factor in Friday's trading, he said.
A utility buyer in the South said his staff expects a little confusion in Friday trading because of a mild weekend being followed by a huge swing in temperatures starting Monday. "It makes it tough on people like us to make purchases over four days of changing weather," he added. The utility will try to inject any excess gas into storage as much as possible through Sunday, then let the extra heating demand soak up the contracted supplies starting Monday, he said. But it has to be careful not to exceed daily injection limits, he said.
The buyer said his company will also try to make some one-day deals for Tuesday flow only "because that's probably going to be the coldest day of the week." A couple of suppliers have indicated that this won't be a problem, he said.
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