It's still fairly cold in most markets early this week outside the southern tier of states, but some moderation of temperatures was in evidence as most points ranged from flat to down as much as 80 cents Monday. However, a fresh blast of cold air moving southward from Canada allowed Northeast citygates and some points in the Gulf Coast to continue the upward price trek they had launched in the last three trading days of last week.
The minority gains ran as high as a little more than $1.70 at the Algonquin citygate, while delivered gas in most of the rest of the Northeast was up by dollar-plus amounts. This was despite the fact Boston-area mercury readings are not expected to reach freezing Tuesday. Indeed, most of the region was due to fall below freezing levels Monday night and stay there until early Wednesday afternoon, according to The Weather Channel (TWC).
The Midwest is getting only a slight easing from last week's chill, but it was enough to cause at least modest softness at all regional citygates and Midcontinent points. The South will experience a bit more relief, with Tuesday highs in the 50s, 60s and 70s from north to south in the area, TWC said. The more moderate weather was obvious to Houston traders who felt comfortable in short sleeves at lunchtime Monday.
Although snow and cold weather remain in the forecast for upper sections of the West and Western Canada, the southern West will return to generally mild temperatures. The impact of falling heating load was evident as the OFOs, low linepack and similar constraints that plagued many western pipelines last week continued to disappear or be mitigated to some extent (see Transportation Notes).
Although sources considered predicting Tuesday's cash prices something of a toss-up, they will get support from spikes Monday across Nymex's energy futures complex. The natural gas screen rose a little more than half a dollar to again approach the $15 level, while the crude oil contract tacked on nearly $2.
"It's still cold here, but maybe the temps will creep up a little bit" this week, said a marketer in the Upper Midwest. She was glad to see mild softness in area citygates, but said it was not enough of a price reduction to induce her company to buy any new gas for Tuesday. She noted that it was "about time for those high heating bills" that people have been dreading to start arriving. "They [bills] might not be all that bad this time," the marketer added, but the ones due next month for December usage are pretty likely to cause a public uproar.
So far in the Midwest it seems like below normal cold for this early in the heating season, and it's not officially winter yet, she said, observing that the winter solstice will occur Dec. 21. She is hoping that demand destruction will eventually be more effective in bringing down gas prices.
Despite the new attack of cold coming in and Monday's triple-digit gains at most of his market area's citygates, one Northeast trader could not work up any excitement over the situation. It's "seasonally cold in the Northeast," he said, but it's not such a big deal at this point. Yes, the 'gates were strong again Monday, "but take it with a grain of salt," he advised, looking ahead to a slight Northeastern warm-up after Wednesday. There are no transport issues at all, and the pipe OFOs that the East was able to avoid largely last week failed to materialize at all on the East Coast, he said.
The trader added that there is "no question" that the storage draw last week was big, saying he was hearing guesses of a pull in the 170s Bcf for this Thursday's EIA report. Citigroup's Kyle Cooper said his initial estimation calls for a draw in the low to mid 160s Bcf.
A small gain was recorded over the weekend in restoring shut-in Gulf of Mexico production. Minerals Management Service (MMS) said 52 companies reported 2,312.21 MMcf/d in remaining outages Monday, down only 34.58 MMcf/d from its Friday tally. MMS is switching from previous daily reports on shut-in statistics related to Hurricanes Katrina and Rita to twice-weekly reports; thus its next count of outages is due at 2 p.m. EST Thursday.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.