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Weather Trends, Nymex Sock It to Cash Quotes Again

The cash market rang up double-digit losses across the board Tuesday. Moderating weather trends in the South and West, fairly benign early-December conditions in the Northeast, and a 61.6-cent futures plunge the day before kept prices in free-fall.

Except for Gulf Coast and Northeast tending to see most of the declines of half a dollar or more, price movement was generally consistent across geographic market areas. Overall the drops ranged from a little less than a quarter to around 70 cents.

Nymex made it four-for-four trading days in a row of falling December futures prices, although Tuesday's 12.1-cent drop represented a considerable slowdown in descent from the ones of 42.2 cents on Friday and 61.6 cents on Monday.

Northern Natural-Ventura saw the smallest loss, which wasn't too surprising after checking the pipeline's bulletin board. Compared with a normal system weighted temperatures of 24 degrees at this time of year, Northern expected to be slightly above that at 26 Tuesday before plunging to 11 both Wednesday and Thursday. However, Northern Natural-demarc was closer to the rest of the Midcontinent by falling about 40 cents.

On the other hand, Florida Gas Zone 3 and the Florida citygate headed the list of declining points after Florida Gas Transmission lifted an Overage Alert Day (see Transportation Notes). A utility buyer in the Sunshine State said it would still be "pretty cold" in her area Tuesday night but warming in time for the start of Wednesday's gas day. She noted that FGT was warning of a possible new OAD because cold weather was likely to return Thursday evening.

Price weakness was relatively light at Midcontinent/Midwest points, but most fell at least 30 cents despite lows of 12 and 20 being forecast for Wednesday in Chicago and Detroit respectively. The Weather Channel said a new infusion of arctic air from Canada will return virtually all of the Plains and Midwest to "deep freeze" conditions Thursday.

Even with the Chicago citygate's drop of nearly 35 cents, that market was strong relative to Henry Hub, which was down about half a dollar, a marketer pointed out. Midwest buyers "definitely" are turning more to storage use this week than before, he said. He expected prices to continue lower Wednesday, mainly due to the downward momentum of the screen. He noted that Tennessee had to allocate volumes at Station 834 in Louisiana Tuesday because of overscheduling.

An intrastate Texas trader expressed surprised at how strong Waha was, despite falling more than 45 cents. There was a lot of both next-day and intraday demand at Waha, he said, primarily because a North Texas LDC was short on supply and placing plenty of Waha orders.

The trader said he was "a little worried" about prices possibly crashing next week because it appears that "much-above-normal" temperatures will dominate U.S. weather. Also, he was hearing estimates for a relatively small storage draw somewhere in the 20s Bcf to be reported Thursday. That would be quite bearish, he said, because cold weather had already invaded much of the rest of the country and had reached parts of the South by the last two days of the period (Thursday and Friday) covered by the report for the week ending Dec. 1. "We'll probably still have 3.3 Tcf left in storage" by the start of January, he said.

Assuming the National Weather Service (NWS) has it called right, next week is shaping up as awfully bearish for gas prices. The agency's forecast for the Dec. 11-15 workweek sees above normal temperatures everywhere in the Lower 48 states except the southern 80% of California along with southwest Nevada and the western half of Arizona. The greatest deviations above normal will be centered in the Midwest and northern Plains, NWS said.

The vagaries of Michigan Consolidated Gas throughput have surfaced again. Bentek Energy said its analysis of flows at 14 natural gas hubs (http://intelligencepress.com/features/bentek/) showed that nominated volumes into the MichCon system plunged to a negative 220,000 MMBtu/d Tuesday after having been at zero for the gas days of Dec. 1 and 4. Prior to that, deliveries into MichCon had ranged from 85,000 MMBtu/d to 476,000 MMBtu/d since Nov. 20, Bentek said.

The great fluctuations in MichCon volumes are primarily due to the LDC being one of the few that often redelivers gas from its system back into the interstate pipelines. Also, Bentek is not able to monitor volumes delivered to MichCon by Union Gas Ltd., a Canadian LDC (see Daily GPI, Aug. 11).

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