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Cold Weather, Nymex Support Cash Spikes

Prices skyrocketed at all points Monday as continuing (and widespread) cold weather combined with a half-dollar-plus leap Friday by February futures to bolster the cash market. Just like last week, Northeast citygates saw instances of increases surpassing a dollar, although Monday's gains fell far short of the triple-digit gains on the Tuesday following Martin Luther King Jr. Day, which carried four Northeast averages into $10-plus territory.

The only spikes of more than a dollar on Monday were for New England deliveries at Tennessee Zone 6 and Dracut; otherwise, price strength was spread fairly evenly across geographic market areas in overall upticks that ranged from a little less than 55 cents to $1.10 or so. The top quotes of $8.50 were recorded at the Algonquin citygate and Tennessee Zone 6.

The return of industrial load from its typical weekend decline also gave a small push upward for spot prices.

Chances are good that prices will remain on the rise Tuesday after Nymex continued Friday's big futures gain with another one on Monday. The February natural gas contract was up 43.3 cents to $7.319 despite further weakness in the petroleum product futures complex.

Although no areas were considered especially frigid compared to their mid- to late-January norms, heating demand remains fairly robust overall. That will continue into the weekend as below normal temperatures are expected for nearly all of the East and a good-sized chunk of the West in the Jan. 22-26 workweek (see Daily GPI, Jan. 17).

Frozen precipitation will be in fairly short supply Tuesday, a sharp reversal from the ice storms that plagued much of the U.S. early last week and nearly crippled operations at some locations. Most of the South will be dry, while snow and/or ice will be patchy in the Northeast, Midwest and West, according to The Weather Channel.

With the cancellation of OFO-like actions by CenterPoint and Southwest Gas (see Transportation Notes), pipeline constraints had almost disappeared from the transportation picture as of Monday.

A western utility buyer noted in understatement that as in the case of everyone else, "prices are up for us" pretty strongly. Pacific Northwest area weather was rather moderate compared to a week earlier, she said, and should be warming up a bit more later this week. To her, that meant likely cash softness in the near future, but probably not Tuesday because of the muscle flexing in gas futures Monday. The screen strength should keep physical prices rising at most if not all points for at least one more day, she said. Now that Northwest has ended its last entitlement, regional transportation is pretty smooth, the buyer added.

There is a storage issue for Northwest customers. Starting Tuesday the pipeline will be limited to withdrawals of 240,000 Dth/d from Questar's Clay Basin facility until further notice (see Daily GPI, Jan. 22). Northwest noted that it requested the restriction in order to limit contaminates flowing from Clay Basin into its system. "Although both Northwest and Questar have installed equipment to extract these contaminates, the equipment is currently unable to extract all the contaminates when flows exceed 240,000 Dth/d," Northwest said in explaining the constraint.

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