Cold weather trends managed to sustain a substantive cash rally into a second straight day for the first time in more than a week Thursday. Even a 3.4-cent retreat by December futures a day earlier failed to keep prices from rising by double digits at most points again.
A few flat to about a nickel lower quotes, all related to the New England market, were left out of gains ranging from about a nickel to a quarter or so. The biggest increases were concentrated in the Midcontinent and Rockies.
The Energy Information Administration pretty well met consensus expectations in reporting a storage injection of 67 Bcf for the week ending Oct. 29, although estimates by some analysts were as much as 10 Bcf lower and as much as 9 Bcf higher. Probably because the addition so greatly exceeded the year-ago volume of 28 Bcf and the five-year average of 27 Bcf, Nymex traders initially took a bearish view in sending December futures lower, but the contract recovered just enough to post a meager daily gain of 2 cents (see related story).
Despite one of the heftier increases at the Chicago citygate, where sub-freezing lows are beginning to show up, IntercontinentalExchange (ICE) said Chicago volumes on its trading system plummeted from 915,800 MMBtu Wednesday to 777,800 MMBtu Thursday.
The Weather Channel said an upper-atmosphere trough will nosedive southward through much of the East to end the work week and start the weekend, bringing enough cold air to produce snow in some locations and cause the season's first freeze in others. The trough will reach the South, leaving highs in the 70s temporarily just a memory for much of the region, although parts of the Texas end will manage to climb barely above 70 Friday.
The Rockies can expect to see above-normal temperatures continue a while longer, while conditions will largely be season for the rest of the western U.S. and Canada.
After slipping to a tropical depression, Tomas was back up to tropical storm status Thursday. Although Tomas still looked capable of brushing the extreme eastern ends of Jamaica and Cuba, Haiti appeared to remain its primary target. There was still no concern for worry about Gulf of Mexico production.
Although they weren't reflected in Thursday's market, two major pipelines signaled the imminence of milder weather returning. Northern Natural Gas will begin at least three days of System Underrun Limitations Saturday because of warming trends in its Upper Midwest market area. And Florida Gas Transmission said that because of "very mild weather" forecasted for its Florida market area over the next several days and linepack exceeding target levels, it may need to issue an Underage Alert Day on an upcoming gas day if linepack becomes too high.
A Texas-based marketer noted a fall-off in futures right after the storage report came out, but the December contract was able to claw its way back up to slightly positive territory. Cash numbers tended to trail off a bit as trading proceeded, but most physical gas had finished trading by the time the report was issued around mid-morning.
The cash market almost certainly will be down Friday, he said, pointing to the warming trends in many areas, the usual weekend decline of industrial load and the bearish nature of another big storage build that handily exceeded historical comparisons. At least people are "a little less on edge now" that the industry has had a spell of cold weather to take some pressure off high production and storage inventories.
The marketer said his company's shale gas purchases are primarily from the Marcellus play. He was wondering how long it will be before production will peak there but said with output in much longer-established plays like the Barnett Shale still rising, he guessed it will be a long way off before declines start showing up in the Marcellus.
Overnight and morning lows are currently getting a little below freezing, "but it doesn't feel all that bad," said a Midwest utility buyer. And despite an occasional frost this week, warmer temperatures are no further away than the weekend, she said.
The utility experienced its lowest volume of October gas sales in 30 years because of the mild weather, the buyer continued, and it still is not seeing any appreciable increases in gas demand so far in November. She reported having anticipated Northern Natural's System Underrun Limitations because of the forecasts for warmer weather.
A Midcontinent producer confessed to having "just lit my furnace" Wednesday morning. He said his chief market hassle currently was OGT not allowing gas to come in from some off-system pipes (his company is holding some gas on Southern Star Central). OGT is claiming that it's due to high pressures, he said, but he deplores intrastate marketing affiliates because "they always seem to have the supply when prices run up and everyone else can't fill the markets."
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