Cold Approaching Midwest, Screen Boost Most Prices
It's been a long wait, but traders are finally seeing what they said was needed to spark a turnaround in a sagging gas market: genuinely substantial cold weather approaching a major market area. That and continued, albeit moderate, support from the December futures contract generated cash price increases Thursday ranging from a nickel or less in the Rockies and California to between a nickel and about 15 cents in the Southwest, Gulf Coast, Midcontinent, Midwest and Appalachia.
Only Northeast citygates failed to realize gains, ranging from flat to down about a dime. There still is "no weather" in the Northeast, a marketer commented, but there is some approaching the Midwest. Although a snowstorm was still in the Dakotas and weakening a bit Thursday, it was expected to bring cold temperatures to the previously mild Midwest as early as today.
A Midcontinent producer said he could detect utility demand in the Midwest "picking up fairly well." Much like the day before, Midcontinent numbers tended to rise as the morning went on, he said.
The producer and other sources said it was a "tough call" on weekend prices, but a majority agreed that between early winter blast in the northern U.S. and a firm screen both Wednesday and Thursday, prices today are likely to be flat or a little higher.
Transwestern was still curtailing 400,000 MMBtu/d on a section of its mainline in northwest New Mexico Thursday (see Daily GPI, Nov. 2). Removal of derailed train cars took till nearly dusk Wednesday, a spokeswoman said, so inspection of the line could not begin until Thursday. Service may be able to resume today.
Noting that Sonat had ended October with an estimated cumulative system imbalance that was 905,670 Dth long, a marketer said, "It's best to be short in that situation." The imbalance got so big primarily because prices fell so low in the last week of October "that people started sending gas to fictional places," he said. "They'd rather sell to Sonat at a $5.12 cash-out [price] rather than to somebody else in the $4.50s." The pipeline got close to an OFO in that last week, but shippers fell in line when threatened with a $15 penalty, the marketer said.
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