Spring officially began Tuesday evening, and despite a warming trend in the Midwest along with generally moderate weather already occupying the South, cash prices rose at a large majority of points that day. Several Rockies points spiked by dollar-plus amounts in rebounding from big plunges Monday, while most of the small losses were concentrated in Appalachia and at Northeast citygates.
Most of the market realized gains ranging from 2-3 cents to a little more than half a dollar, with a few flat points thrown into the mix. The outperforming Rockies market rose anywhere from nearly 75 cents to a little shy of $1.40. An NGPL-Amarillo Line drop of a little more than 15 cents outpaced Dominion and Northeast losses that peak at less than a dime.
It was rather hard to rationalize the Rockies strength, since the pre-existing constraints of a SoCalGas OFO (extended through at least Wednesday) and a major reduction of El Paso's North Mainline capacity this week were augmented by a cut of injection capacity at Questar's Clay Basin storage facility (see Transportation Notes). However, one source suggested that western heating load may be greater than previously expected. The Phoenix-area high, which was reaching the low 90s only a few days ago, was predicted to cool to only 79 Wednesday, with a low of 57.
The suggestion had some support from The Weather Channel, which said most temperatures in the West will be around normal for the start of spring, with highs "expected to range from the 30s in the northern Rockies to the 80s in southwest Arizona and far southeast New Mexico. Most of the Pacific Northwest will top out in the 40s and 50s."
Also, there might have been some feeling that Monday's trading, in which some Rockies points plunged below $3 at their low ends, may have been an overreaction to fundamentals weakness.
Despite SoCalGas keeping its OFO in place, the Southern California border average rose more than 35 points.
Northeast points saw small losses even as chilly conditions in the region persist longer than expected. A marketer said he still felt Northeast prices were relatively strong in comparison to where seasonal cash basis usually is, thanks to the stubbornness of the current cold spell. He noted that New England citygates still hold about a dollar premium to Henry Hub, but thinks that will shrink to 70 cents or less soon. He said he expects larger losses than Tuesday's going forward this week as the weather forecast "flip-flops." Northeast temperatures were about 10 below normal Tuesday, but should get to 10 or so above normal by Thursday, which would represent about a 20-degree swing, he said.
Although the marketer said prices moved slightly lower in late trading, a Midcontinent producer said his numbers got a little extra late boost from rising futures Tuesday. Although Tuesday's cash market had a negative influence from a 7.7-cent screen drop Monday, it will get minor support Wednesday after the April contract made a 6.3-cent rebound Tuesday.
The producer said he sold NGPL-TexOk in the low $6.20s Monday, but averaged just shy of $6.30 Tuesday.
Analyst Ron Denhardt of Strategic Energy & Economic Research expects the Energy Information Administration to report the first injection of the not-quite-there-yet traditional storage resupply season Thursday. He looks for a build of 13 Bcf to have occurred in the week ending March 16.
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