Going into the weekend, buyers and sellers on Friday for weekend and Monday deliveries were mostly balanced, as a strong Northeast and Appalachia were able to offset weakness in Texas, Louisiana, the Rockies and California.
The NGI National Spot Gas Average added 2 cents to $3.29, but eastern points got a boost from strong power demand expected next week. Futures took a breather following the 19-cent rise from the previous two sessions as January lost 6.9 cents to $3.436, and February also slipped 6.9 cents to $3.440. January crude oil continued its romp higher and gained 62 cents to $51.68/bbl.
Analysts see firm physical pricing next week as cold weather treks eastward from the Rockies to the East.
"Demand and prices are poised to rise...through early next week as the coldest temps so far this season are making their way into U.S. markets coast-to-coast," said industry consultant Genscape Inc. in a report. "Several Northeast markets are already experiencing the cold," as prices firmed in weekend trade at the Algonquin Citygate, Tenn Zone 6 200L and Transco Zone 6.
Friday’s demand in New England was up to 2.97 Bcf/d, Genscape noted. The "weekend effect may sap some of the momentum, but with the cold forecast to be present well into next week, we have demand rising to a peak of 3.1 Bcf/d on Tuesday."
Appalachia demand, Genscape said, rose above 12 Bcf/d on Thursday and remained there on Friday.
"We show it picking up about 0.4 Bcf/d through the weekend and headed toward a peak of 14.2 Bcf/d by Monday. Southeast/Mid-Atlantic demand is also expected to remain elevated," after cresting at the 15 Bcf/d-mark Thursday and climbing to 16.2 Bcf/d by Monday.
Gas for weekend and Monday delivery at the Algonquin Citygate jumped 68 cents to $4.32, and deliveries to Iroquois, Waddington added 22 cents to $3.91. Gas on Tenn Zone 6 200L jumped 32 cents to $4.21.
Packages on Texas Eastern M-3, Delivery rose 6 cents to $2.88, and gas bound for New York City on Transco Zone 6 rose 23 cents to $3.29.
Firming power prices and strong Monday loads also made purchases for incremental gas-fired generation more feasible. Intercontinental Exchange reported on-peak Monday power at the ISO New England's Massachusetts Hub jumped $9.98 to $43.91/MWh, and Monday power at the PJM West terminal rose $2.80 to $35.82/MWh.
Monday power loads were forecast to be higher than Friday's. The PJM Interconnection forecast peak power Friday of 34,451 MW would reach 35,115 MW by Monday. The New York ISO predicted Monday peak power load of 20,483 MW, well above Friday's 19,826 MW peak.
Major market centers were widely mixed. Gas at the Chicago Citygate rose 2 cents to $3.41, and gas at the Henry Hub shed a penny to $3.41. Deliveries to El Paso Permian slipped a dime to $3.16, and gas at the SoCal Citygate plunged 19 cents to $3.41.
Traders see the market embracing the trend to colder temperatures at the expense of record storage.
Gas supply "remains at a record level per date," but "this static factor continues to take a backseat to the bullish dynamic of upcoming cold weather trends," said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients. "Technical indicators also appear bullish amidst fresh multi-week highs that have been developing on almost a daily basis.
"While our indicators are beginning to signal an overbought condition, the market also appears to see little chart resistance until the mid-October highs of about $3.67.
"In sum," he said, "we will continue to caution against attempts to pick a top to this strong three-week price advance as we continue to emphasize holding bull spreads that appear capable of capturing the influence of additional expected strengthening in the cash basis.
Allowing for "a consolidation phase for a few sessions as the market digests the huge 80-cent price-up move of the past three weeks, we feel that a further extension of cold temperature forecasts toward the Christmas holiday break could further advance January futures toward the October highs of about $3.67," Ritterbusch said.
The nearest price support "develops at about the $3.37 level," which "could easily be tested on even a minor bearish shift in the weather views," he added. "But for now, we are steering away from any strong buy or sell recommendations at this early stage of the heavy usage cycle when even minor shifts in the forecasts tend to prompt an outsized price response."
Gas buyers across PJM for Friday and weekend power generation will have only a nominal amount of wind power to offset gas purchases.
A "complex, split storm system will introduce an increasing chance for one round light rain/snow showers during late Sunday into early Monday," said WSI Corp. in its Friday morning report to clients. "A second round of rain, perhaps even some wintry weather, is possible during Tuesday. Temperatures will generally fluctuate in the upper 30s, 40s to mid 50s.
"A brisk west-northwest wind behind the cold front" was expected to continue to support elevated wind generation on Friday, with output forecast to be 2-3 GW. "Eventually, wind gen will drop off and become light during the majority of the weekend, with only modest improvement during early next week."