Prices were up at nearly all points Tuesday despite little appreciable increase in heating load, although lows around freezing or a little less were due to return Wednesday in the northern Rockies. They would join similar conditions already existing in upper New England/upstate New York and parts of Eastern Canada, while most of Alberta and some other sections of Western Canada were expected to bottom out from the upper teens through the mid 20s.
Cash support from Monday's 1.8-cent advance by May futures was meager, but it would be more substantial for Wednesday after the contract rose another 6.1 cents Tuesday (see related story).
Dollar-plus rebounds at several Rockies points were way out in front of numbers ranging from flat to a little more than $1.40 higher. The Rockies market was recovering from the devastating effect on Monday of several major transportation outages/constraints in San Juan Basin and the Rockies that had been scheduled for Tuesday only, but were disappearing for the most part Wednesday.
However, the Rockies spikes did not reflect overall market dynamics, in which many gains were in single digits and were limited to a little more than a quarter outside the Rockies and San Juan Basin.
Northwest-South of Green River, which had seen quotes drop as low as 34 cents Monday, was very thinly quoted Tuesday but rose into the upper $2.20s. Cheyenne Hub, which had gone against the overall Rockies market grain Monday with a spike of 60 cents due to some of the constraints working to its advantage, was the region's only softening location Tuesday.
Cheyenne Hub was joined by several Midcontinent points in recording losses ranging from about a nickel to nearly 15 cents.
Forecasts of chilly lows in the 40s at the eastern end of the South may have contributed a modest amount of heating load to Wednesday's market, while at the region's other end Wednesday highs in the upper 70s and low 80s likely will prompt the running of some air conditioners. Otherwise, though, mostly moderate temperatures did not make a convincing argument for Tuesday's overall firmness. Even Minneapolis, which is usually a leader in cold weather in the U.S., was due to go no lower than about 40 Wednesday.
"The Midcontinent was a mixed bag on Tuesday, but most everything remained flat," a regional producer said. "Prices were a little high on Monday for Tuesday flow, but Tuesday prices for Wednesday flow were quiet. People are balancing the pipes. CenterPoint went up a little bit, but that's about it."
The trader noted that the overall gas market story hasn't changed from the past few weeks. "Storage is still full and finding a market for your gas is getting tougher, even though prices are lower. We are having a tough time placing gas on an Oklahoma pipe. At any price you can sell gas, we are just going to have to work harder to find a good market."
As producers continue to scale back production levels and capital spending budgets, cash market and futures traders are still waiting for the repercussions on price. The timing of the impact is still widely debated.
"Some people think we will see the effects on price sometime this summer, but no one really knows when it will hit," the producer said. "All that is known is that in an oversupplied market like we have now, there will be a lag between the drills being laid down and any sort of supply crunch."
A Gulf Coast trader also had some thoughts on the upcoming summer market. She was "not sure why" most prices were up Tuesday because there was not enough cold weather to impress her, and May futures were up less than 2 cents Monday. But she suspected that with Henry Hub cash numbers trading several cents below Nymex Tuesday, that "probably indicated to a lot of traders that buying for storage injections now is a good play.
Of course, rapid storage refills so early in the injection season means there's a good chance of a market crash toward late summer or early fall when storage ceases to be an option for parking gas that isn't in demand for other purposes, the trader added. She said she supposed that whether such a crash actually occurs depends on whether there's enough summer heat to soak up the extra gas.
The trader said it was a slow market Tuesday, "which is a good thing because I'm getting to catch up on paperwork."
At least it's stopped snowing in his area, a Midwestern marketer noted, but temperatures are still cold enough to have the Consumers Energy citygate rise about a dime Tuesday. Midwestern weather transition during spring can be quirky, he said. Things might go from shivering conditions to temperatures high enough to spur air conditioning use in just a few days, he said.
Stephen Smith of Stephen Smith Energy Associates said he is projecting a storage build of 21 Bcf for the week ending April 10, which he said was up from his original estimate of 15 Bcf.
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