With the cold weather that had buoyed cash prices for most of the week due to get more severe, particularly in the East, toward the end of the weekend, the market was showing more weakness Friday than it had since last Tuesday, but flat to rising points still outnumbered falling ones by about two-to-one.
The previous day's futures increase of 7.4 cents and the typical weekend decline of industrial load largely tended to offset each other as cash price influences.
Quotes that were flat to a little more than 30 cents higher were spread fairly evenly across all market areas, while the Gulf Coast tended to realize most of the losses ranging from 2-3 cents to a little more than 15 cents.
Only the Florida citygate drop reached double digits as Florida Gas Transmission ended a two-day Overage Alert Day in its market area (see Transportation Notes).
Relatively moderate conditions will continue to prevail in the desert Southwest and the lower-elevation parts of California. The Texas area was also expected to remain merely cool for the most part into Saturday, but a front moving through the state was due to take lows in Houston down to the upper 30s Sunday. A Houston bottom-end temperature around freezing was predicted for Tuesday.
The rest of the South was due to experience a chilly weekend, but with temperatures rarely dropping below freezing until more frigid weather arrives around the beginning of this week.
The National Weather Service's six- to 10-day forecast posted Thursday afternoon indicates below-normal temperatures spreading westward by midweek as far as the Midcontinent and East Texas in the central U.S. and on into Montana nearer the Canadian border.
More immediately, freezing-area lows were forecast for the weekend in the Northeast, with conditions getting progressively colder in much of the Midwest.
Southern and MRT were among the pipes announcing an OFO or similar restrictions to guard against excessive negative imbalances related to cold weather (see Transportation Notes). Although it took no specific action, Texas Eastern asked shippers to either stay in balance or possibly start running positive imbalances on Monday.
However, reflecting milder western conditions, El Paso continued to warn shippers of potential restrictions due to high linepack.
Even with an OFO being implemented Monday, Southern prices fell a little more than a nickel (approximately as much as the previous day's gain) on IntercontinentalExchange's (ICE) online trading platform. Also, Southern volumes dropped from 531,800 MMBtu Thursday to 479,300 MMBtu Friday, ICE said.
Chicago citygates barely inched a penny or so higher on ICE, but volumes jumped by a little more than 100,000 MMBtu to 1,043,200 MMBtu for the weekend.
A normal system-weighted temperature of 25 degrees for this time of year would seem plenty frigid to most people, but Northern Natural Gas indicated just how severe conditions in the Upper Midwest were due to get by projecting that an average of 23 Friday would drop to 19, 11 and 10 on the succeeding Saturday, Sunday and Monday, respectively.
However, a Midwest utility buyer said it was "not quite cold enough yet" for Northern to declare a System Overrun Limitation; besides, the pipe is still close to full in its storage facilities, he noted.
The utility's business is very strong with sub-freezing temperatures starting to become common in its service area, the buyer said. It's nothing brutal; just good gas load-boosting weather, he added. But as long as it isn't very windy, outside conditions are not especially uncomfortable for locals, he said.
The local forecast looks consistently very cold for at least the next 10 days, he continued. As planned for December, the company is pulling from storage to supplement other supplies as necessary during this period of high heating load, he said.
A utility buyer in the Northeast reported that his company hasn't needed any spot gas recently but is getting by on winter term contracts and storage pulls. He said it would require area temperatures sinking into the teens or lower to cause his staff to dip into the spot market, and that didn't look likely for at least the next two weeks.
Citi Futures Perspective analyst Tim Evans suggested that a larger-than-expected drop in demand over the Thanksgiving holiday or possibly the arrival of extra liquefied natural gas imports -- a one-time factor, that is -- may have been more responsible for Thursday's storage withdrawal report falling short of expectations "rather than an ongoing bearish shift in the background supply/demand balance."
Only two of the 23 trading points covered by Bentek Energy's U.S. Natural Gas Hub Flows chart, Panhandle Eastern-Haven and Sumas, realized nomination gains for Friday. All others were flat to as much as 19% lower. Tennessee Zone 0 led the percentage declines by dropping 80,000 MMBtu to 342,000 MMBtu. Although their percentages fell by less, the Florida citygate, PG&E citygate, Southern California border and Texas Eastern M-3 had much larger volume decreases of 406,000 MMBtu, 228,000 MMBtu, 306,000 MMBtu and 157,000 MMBtu, respectively, Bentek said.
Eight more rigs joined the U.S. search for natural gas in the week ending Dec. 3, according to the Baker Hughes Rotary Rig Count. Two were added in the Gulf of Mexico and the onshore tally was up by six, Baker Hughes said (see related story).
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