Forecasts of freezing highs Friday failed to keep Northeast citygates from measuring their declines in triple digits as they led across the board price softening Thursday. With spring-like conditions already established in the South and nonmountainous sections of the West, and a still-chilly Midwest continuing a warming trend, light heating load was the chief instigator of Thursday's drops.
April futures also applied negative pressure to the cash market, following up Wednesday's dime-plus fall with a further drop of 12.7 cents Thursday.
Transco Zone 6-New York City, which had topped out at $20 Monday and Tuesday during a bitter cold snap, continued to stay out in front of the overall descent with a further dip of about $2.80. Other Northeast points also fell more than $2, and Dominion in Appalachia recorded a dive of about $1.40. Otherwise, declines ranging from about C15 cents (Westcoast Station 2) to about 65 cents were spread fairly evenly across geographic market regions.
With the end of the traditional withdrawal season drawing ever nearer, storage use was believed to have offset heating load created by a cold front moving through New England Thursday that raised the possibility of date-specific record lows being established Friday morning from New York through Boston and beyond.
Northeast citygates took steep dives in spite of a wave of arctic air being poised to set more record lows across the region Friday, according to an advisory by Weather 2000. A "pleasant thaw" is on tap there next week, but another polar air mass is slated to invade the Northeast by St. Patrick's Day weekend, the New York City-based consulting firm said. It added that temperatures across several Northeast states have been registering an "amazing" 20-25 degrees colder all this week than computer models had predicted.
The Energy Information Administration was in line with industry expectations in reporting a storage withdrawal of 102 Bcf for the week ending March 2; consensus estimates had centered around 100 Bcf. The response by Nymex traders could be summed up as essentially "[yawn] So what?"
SoCalGas put a damper on Golden State demand by extending a high-linepack OFO through at least Friday. Although its giant LDC neighbor to the north, PG&E, did not issue an OFO, it projected that California Gas Transmission system linepack would be bumping up against maximum target levels Saturday and Sunday.
Northern Natural's bulletin board illustrated the decline of Midwestern heating load. Compared to a normal system-weighted temperature of 30 degrees at this time of year, the pipeline projected averages of 33 Thursday rising to 35 Friday, and 36 on both Saturday and Sunday.
According to a posting by the LNGLawBlog.com website, data collected by the North American Terminal Survey (NATS) indicated that Thursday was "scheduled to break the single-day record for LNG regasification in the U.S." The five active terminals were due to regasify 3.3 Bcf that day, including record utilization at both Dominion's Cove Point facility in Maryland and the Trunkline LNG facility in Louisiana. "These records come on the heels of a recently completed NATS analysis of the utilization percentage of Atlantic Basin LNG terminals in 2006, which demonstrated significantly lower utilization at the U.S. terminals," the posting said.
A utility buyer in the Lower Midwest said that even with a low around freezing predicted Friday, local temperatures would be rising into the upper 60s over the next few days. Of course, that meant the utility's throughput would take a major hit. His system was running 200,000 Dth/d or so in the first few days of March, the buyer said, but he expects the volume to be less than half of that early next week.
A marketer in the Upper Midwest applauded declines in both the cash and futures markets, saying it looked like prices would be "coming our way" for the foreseeable future. Local temperatures in the 50s are due next week, she said, "which will be highly welcomed by me" and others in the area. After all, the marketer added, she still had snow piled up in the yard from recent cold weather. The company hasn't bought any spot gas since the start of March and continues to wait for prices to come down further before reentering the daily market, she said.
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