It's still pretty cold in most places, especially the shivering Northeast, but there was enough of a moderating trend under way in such areas as the western South, Midcontinent/Midwest and Southwest that prices fell at nearly all points Thursday. The 17.6-cent decline in February futures the day before also contributed negative guidance to cash numbers.
Only two Northeast citygates prevailed against the trend by rising. Texas Eastern M-3 was up a little more than half a dollar, but the really "hot" action once again was at Transco Zone 6's New York City pool, which not only repeated its peak quote of $30 but managed a gain of nearly $5 to leave its average a little shy of $25.
Otherwise, the cash market was a solid sea of softness, with losses ranging from about a dime to the $3.35 area. The biggest declines of more than a dollar occurred at other Northeast points besides M-3 and Zone 6-NYC. New England citygates led the downhill charge despite a high of 10 degrees being forecast for Boston Friday and below-zero wind chill alerts being posted for the region.
The Energy Information Administration came in slightly above consensus expectations in the mid 170s Bcf when it reported a storage pull of 179 Bcf for the week ending Jan. 19. That put a significant dent in the year-on-year inventory surplus, as only 76 Bcf was taken out in the comparable week of 2006. But Nymex traders weren't impressed at all since a large withdrawal had already been factored into market psychology. They pushed the February natural gas contract 51.6 cents lower as the three-day countdown to expiration began.
Making a call on Friday's price direction was essentially a toss-up. The Northeast will remain frigid, and much colder temperatures will be returning to the South and Midwest over the weekend and to some western areas early next week. However, a new build-up of heating load will be arrayed against Friday's screen dive and the drop of industrial load that accompanies a weekend market.
Predictions of temperatures just above freezing in northern Florida led Florida Gas Transmission (FGT) to advise market-area customers of the potential of an Overage Alert Day being declared for upcoming gas days. However, even if one is issued, FGT said it "believes there is a low probability for the need to interrupt previously scheduled" market-area ITS-1 service.
Some Columbia Gas (TCO) shippers may return to their offices Friday to face replacing lost supplies if they left early Thursday. The pipeline reported late that afternoon that it had experienced a mechanical failure of its Unit #2 power turbine at the Strasburg Compressor Station in Shenandoah County, VA. The turbine may be returned to service Friday, TCO said, but it declared a force majeure and planned to cut shippers' Total Firm Entitlement (TFE) with primary firm delivery points in Market Areas 24, 28, and 29 and the portion of Market Area 30 east of Lost River by 9% starting at 10 p.m. EST Thursday. "Therefore, this 9% cut will be prorated for the remaining 12 hours of the 1/25/2007 gas day, resulting in a 4.5% reduction to TFE. The 9% reduction will remain in effect until further notice," TCO said.
It will get colder again next week in the West, a regional marketer said, but "it's nice to be above freezing for now." He saw "a little bit" of February bidweek activity going on Thursday, but perceived it as a somewhat slow start.
A Texas marketer reported that Chicago citygate basis for February was trading at plus 5 cents late Thursday.
A utility buyer in the Lower Midwest said his area was experiencing "a day or two of moderation," then would get much colder again this weekend. His company has been seeing pretty normal throughput during January, which he called "a big improvement" from December's mildness. The utility won't be buying any baseload supplies for February, he said; it has a good amount of winter term gas under contract and "plenty of storage" to go through.
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