Daily GPI / NGI All News Access

Nearly All of West Joins East in Cash Declines

Almost the entire cash market fell Tuesday as heating load remained scarce despite a snowstorm that will be bearing down on the central Plains Wednesday. Only a nickel rise by Questar prevented across the board losses.

Futures weakness a day earlier (the January contract fell 33.4 cents Monday) and bearish attitudes about the upcoming storage report were other factors in cash prices declines that ran the gamut from a little less than a dime to nearly 45 cents. No region stood out as particularly much weaker or much stronger than others.

A screen rally of less than a penny Wednesday was believed unlikely to resurrect the fortunes of the physical market. And sources' reports of recent storage injections make it a near-cinch that Thursday's report by the Energy Information Administration of activity in the week ending Dec. 15 will fall far short of the 168 Bcf pull registered in the comparable week last year. Several estimates for the new report are centered around the low 60s Bcf, which if realized would raise the year-on-year surplus by more than 100 Bcf.

Old Man Winter is on the verge of beginning officially, but is looking rather anemic at this point. There are overnight lows approaching the freezing vicinity in northern market areas and even the teens in the Intermountain West, but much of the coldest weather is occurring in relatively sparsely populated region, dampening the impact on gas-fired heating load. Besides, such lows are considered not at all unusual for late December and even a tad on the light side in some instances. Storage is abundantly available to avoid the need of many buyers to access new production.

An Upper Midwest marketer summed up the status quo in this fashion: "We're swimming in gas" because it's so mild. Her company is having to move supplies around to accommodate the needs of customers who aren't using as much gas as expected, she said, and that's not easy to do without any storage capacity, although some of the customers do have storage accounts.

"It's gotten cooler, but not cool enough" to make up for the lack of demand, the marketer said. Locally, it's getting to around freezing overnight but daytime temperatures are a little higher than normal, she added. However, the region "might" get some snow for Christmas, she said.

A Houston-based producer agreed with the marketer, saying he was finding "almost no demand." The Midcontinent and Midwest will be getting colder as a storm keeps moving eastward out of the West, but it doesn't look like it will be enough to rally the market, he said. "I wish it would get cold everywhere; that would make it a lot easier to sell this gas," he said wistfully. (For the record, Houston is due to peak in the low 70s Wednesday and Thursday before falling to highs around 67 Friday and 58 Saturday.)

The weather outlook remains bearish for the last week of December. During the Dec. 25-29 period the National Weather Service predicts above normal temperatures across essentially the northern half of the U.S., with such conditions extending as far south as northern Virginia on the East Coast and Southern California on the West Coast. The only area where the agency expects below normal readings is from southwest Louisiana through Texas just south of the Dallas-Fort Worth Metroplex (excluding the Panhandle) and encompassing nearly all of New Mexico along with the eastern edge of Arizona.

©Copyright 2006 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.

ISSN © 2577-9877 | ISSN © 1532-1231
Comments powered by Disqus