Southern lows predicted to drop to the 50 area east of the Mississippi River were contributing a small amount of heating load to the much bigger demand in Canada and from the U.S. Northeast through the Midwest into the Upper Plains. The entire cash market continued to move higher Thursday except for a flat Agua Dulce, but significantly smaller increases than the day before signaled that the week's bullishness might be running out of steam.
Upticks ranged from about a nickel to around 45 cents. Northeast deliveries continued to command the biggest increases, but they were substantively less than a day earlier. A moderate majority of gains were in single digits.
After receiving prior-day screen support Thursday, the Friday cash market will have to contend with negative guidance after April futures dipped 9.1 cents (see related story). Defying a few predictions of the year's first overall net injection into storage, the Energy Information Administration's report of a 6 Bcf withdrawal during the week ending March 18 dovetailed well with consensus expectations. Apparently that didn't encourage buying by Nymex traders.
Other than much of the South starting to feel the tinges of winter-like weather from the already mostly freezing northern climes of the U.S., the weather outlook was relatively unchanged. However, a Rockies producer said regional temperatures Thursday were quite a bit colder than predicted.
Even with Kern River having resolved low-linepack issues by Wednesday, supply conditions remained unsettled in some portions of the West. While PG&E was issuing a low-inventory OFO for Friday, Westcoast issued a high-linepack OFO Thursday (see Transportation Notes).
IntercontinentalExchange (ICE) said PG&E citygate deals on its platform rose nearly a dime on average, while volumes saw an increase from 856,000 MMBtu Wednesday to 995,100 MMBtu Thursday.
There was relatively little overall change in throughput Thursday at 23 trading locations covered by Bentek Energy's U.S. Natural Gas Hub Flows chart, with gains moderately overshadowing losses. Three points saw the top increases: Columbia Gas, up 617,000 MMBtu (17%); Chicago citygate, up 361,000 MMBtu (14%); and Northern Natural-demarc, up 146,000 MMBtu (21%). Nine other upticks were 93,000 MMBtu or less, Bentek said. Downturns were minor in being led by Northern Natural-Ventura, which fell 53,000 MMBtu (5%).
The Rockies producer said he was a bit surprised when futures fell in spite of the storage pull being pretty much as expected. However, he added, coal prices "are hanging in there pretty good," so he expects gas to keep capturing market share in power generation from the dirtier-burning fuel.
He dismissed the current debate on LNG exports as having no near-term impact on the gas market, saying they wouldn't occur at British Columbia's Kitimat facility before about 2015 at the earliest.
The producer expects April prices to be "pretty iffy" in the Rockies due to Questar's Clay Basin storage facility being down for most of the month and other maintenance issues.
A Florida trader said new Phase 8 expansion rates starting in April by Florida Gas Transmission (FGT) probably would be neutral to his company but would result in lower costs for many buyers in the state. He reported some April baseload deals done Thursday at basis of minus 3 cents for FGT Zone 1 in South Texas.
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