On a day when Nymex traders set the record bar for crude oil futures substantially higher, a continuation of frigid weather in some areas and the strongly supportive 31.7-cent advance by March natural gas futures the day before caused a majority of points to continue their ascent Wednesday.
Relatively moderate temperatures in much of the South and some parts of the West allowed several points, clustered primarily in the Midcontinent/Midwest, to fall by as much as about 45 cents. The rest of the market realized gains of anywhere from 2-3 cents to about 60 cents, with a few flat points in the mix.
The Northeast was divided as three of the primary New England delivery points (Tennessee Zone 6, Dracut and the Algonquin citygate) dropped. However, other Northeast citygates rose, led by gains of 53-57 cents at Transco's two Zone 6 pools (New York City and non-NYC).
The screen has essentially neutral guidance for Thursday's cash market, following up Tuesday's spike with a minuscule 1.2-cent drop Wednesday. However, once again the big excitement at Nymex was over in the crude trading pit, where Federal Reserve notes indicating further interest rate cuts prompted an intraday high of $101.30/bbl for March crude and a record daily settlement of $100.74.
Icy precipitation will continue to plague much of the Midwest Thursday, but temperatures will be rising from levels that were often around zero Wednesday. It will be dry and not quite as cold in the Northeast; New York City is due to see Wednesday's low in the low 20s rise to the mid 20s Thursday.
Meanwhile, the South continues to experience relatively moderate conditions, especially in its western end where New Orleans and Houston will see temperatures peak in the low to mid 70s Thursday. And the West is finding only moderate heating load outside the mountain regions; several Rockies points were flat to a little more than a nickel lower.
Referring to late 2007 and early 2008 forecasts of a warmer-than-normal February that proved largely inaccurate, one source suggested that the weather people "get a new dart board." Indeed, as of Wednesday a large majority of points traded at hefty premiums to first-of-month indexes. The only exceptions with deficit pricing were Sumas and a few (but not all) Northeast citygates.
A utility buyer in the Lower Midwest said that "maybe by Friday" Northern Natural Gas will call off its System Overrun Limitation, which was extended through at least Thursday. If not Friday, then Saturday, he added. (The pipeline indicated that Wednesday's system weighted average temperature around zero would rise by several degrees each day to around 23 Saturday.) With sub-zero temperatures Wednesday, his company is "moving a lot of gas" in the meantime, he added.
The local expected high of 21 degrees Thursday "will be a relative heat wave" compared to recent conditions, the buyer joked. The area should be back to normal in the mid to high 30s next week, he said.
It was similarly frigid for a marketing company in the Upper Midwest. A nontrading representative said a 3-degree low was forecast for Thursday with sub-zero wind chill, but there should be a "little moderation" towards the end of the weekend. A couple of area utilities had OFOs in effect, she said, adding that she wasn't sure which ones, "but it's not any of the biggies" like MichCon and Consumers Energy because they have ample storage.
First Enercast Financial predicts a report of a 168 Bcf storage withdrawal for the week ending Feb. 15.
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