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Mixed Pricing Sees Eastern Gains, Softness in West

Prices rallied Friday at most points in the East as forecasts called for falling temperatures and winter storms in parts of the overall region during the weekend. Meanwhile, most of the West saw lower prices despite winter storms being expected over the weekend in both the Pacific Northwest and desert Southwest.

Only flat performances at a Midcontinent point and at one in South Texas prevented a solid front of firmness in eastern markets, where gains ranged from a couple of pennies to about 40 cents. The Northeast, which was expecting an especially windy ice-bearing storm to blow in from Canada's Maritimes provinces, saw all of the biggest increases. However, there was a good chance of some power generation load being lost, according to The Weather Channel. "Where significant ice still hangs from the trees from the Mohawk Valley to New Hampshire, the strong winds will be especially damaging," the forecasting service said. "Downed tree limbs will cause some power outages."

Western Canada and the Pacific Northwest were the sites of most of the West's minority advances that ran as high as 17 cents at Sumas. Otherwise, western declines ranged from a little less than a nickel to about half a dollar.

Sumas, which was in the unusual position of trading at a 23-cent discount to Northwest-domestic at midweek, shrank the spread to parity Thursday and then regained its normal strong premium Friday as it recorded one of the West's few gains. The move was accompanied by Northwest ending its last remaining entitlement, as an NGI source had predicted Thursday (see Daily GPI, Jan. 19) and Westcoast shifting its imbalance tolerances to allow some packing of the system after having the pack tolerance set at zero earlier in the week (see Transportation Notes).

Chances of overall price strength continuing Monday are excellent, one source said. Newly regained frigid temperatures will be solidly entrenched across most of the East, Upper Plains, Rockies and Pacific Northwest; a half-dollar-plus spike in February futures Friday will provide good support to the cash market; and industrial load will be returning from weekend hiatus, he said. However, it won't be surprising if some western softness remains because coastal California and the Southwest will be in warming trends by then, he added.

A Midcontinent producer provided another reason to anticipate further gains Monday, saying prices were tending to rise in Friday's later deals. He noted that Henry Hub, which had traded less than a nickel below the screen Thursday, saw the gap widen to nearly half a dollar Friday.

Oklahoma intrastate pipe Enogex called off an operational alert Friday that had been issued earlier in the week because of wellhead freeze-offs, the producer continued. Apparently the production losses had stopped, he said, and he was not aware of any new Midcontinent freeze-offs.

He was a bit annoyed about having made one sale, only to have the buyer call back later to cancel the deal. The man then was on the phone again a whilelater to express regret for reneging and trying to resurrect his purchase, the producer said. Despite the buyer's apology, it was too late because the gas had already been resold, he said.

Calgary-area temperatures are "about normal" on either side of freezing, a producer in the city said. NOVA linepack has stayed relatively flat around 14 Bcf during this latest cold blast, he added. NOVA Inventory Transfer basis from February futures got about a dime wider Friday, going from about US75 cents back to US85 cents. He expressed surprise at the strength of Friday's Nymex run-up, but said he guessed it was based on weather forecasts for more cold weather in key market areas this week.

The Midwest is supposed to get a little bit warmer near the end of the month, said a regional marketer who wished the milder weather would arrive sooner. Her company would have liked to avoid paying Friday's higher prices, she said, but it needed some gas for the weekend because her boss "didn't want to take a chance on getting caught short."

SunTrust Robinson Humphrey/the Gerdes Group said significantly colder temperatures compared to previous weeks suggest a "preliminary" 160 Bcf storage withdrawal last week.

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