As the general weekend respite from a widespread spell of cold weather proved to be fleeting, prices rebounded strongly Monday from their only overall softness of the previous week. Besides the prospects of heating load shooting higher again, the previous Friday's 15.7-cent gain by December futures and the return of industrial demand from its typical weekend lull contributed to cash market increases.
Although a couple of locations just barely made it across the dime threshold, that was good enough for double-digit upticks to reign across the board. They ranged from a little more than a dime to about 70 cents, with much of the West, the Midcontinent and the Northeast tending to make the biggest climbs.
It won't be quite as much as from Friday, but Tuesday's cash quotes will continue to have screen support after prompt-month futures advanced another 10.7 cents Monday (see related story).
The Atlantic entered the home stretch of its 2010 hurricane season with no activity showing up on the National Hurricane Center's tropical monitoring screen.
It was fairly easy to see why the Rockies recorded some of the biggest increases of the day. Not only was there a lot of heating load coming from the east where near-freezing lows were forecast, but the region had its own built-in demand with several sections predicted to approach or reach the zero area Tuesday. Predictions of heavy snowfall in some mountainous areas will occasional be accompanied by localized whiteout and blizzard conditions, The Weather Channel said, and the avalanche threat will be "very high."
Other places can also expect some frigid conditions soon. Some parts of the Upper Plains near the Canadian border are also due to see thermometer levels bottom out in the zero area. And in the Upper Midwest, Northern Natural Gas projected that its system weighted temperature, normally 30 at this time of year, will be plummeting to 12 on Thanksgiving Day.
But with some sections still clinging to highs in the low 70s through Tuesday and possibly Wednesday, the South and South Central U.S. will lag behind much of the rest of the North American market a bit in feeling major cold again.
Normally cold weather is a time for pipelines to act to preserve their linepack from being drafted heavily. That was the case with Westcoast, which said operational problems at the Pine River Gas Plant were causing "supply losses and rapidly decreasing pipeline linepack, and thus it was reducing scheduled quantities by 50% Monday on the Intraday 2 nominations cycle. However, it did not expect to make volume cuts on any subsequent gas days.
But on the other hand, El Paso was warning shippers Monday of the possibility of a Strained Operating Condition being declared because of excess linepack.
The government's report last Thursday of a drop of 19 in the number of active drilling rigs targeting natural gas in the week ending Nov. 12 brought the total to 936, which is the lowest the gas-directed count has been since last March, according to an advisory Monday by Barclays Capital analysts. "While not on a decisive downward trend, drilling is showing signs of moderation," they said." Still, the rig count remains at a level that ensures growth of production, which keeps a lid on the upside potential for prices. Producers would have to cut back drilling sharply from current levels in order for the market to be in balance next year without the help of coal-to-gas displacement in the power generation sector."
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