Despite some of the year's coldest weather being on the way in several regions -- outstripping even the often-severe conditions through the middle of last week -- a large majority of the cash market recorded moderate losses Friday. The previous day's prompt-month futures drop of 17.1 cents and the weekend decline of industrial load tended to offset the expected return of major heating demand.
The low-temperature forecasts failed to keep a large majority of points from experiencing losses ranging from 2-3 cents to about $1.10, although outside the Northeast declines topped out around 20 cents. Other than a few flat to less than a nickel higher locations, Friday's most spectacular gains of more than a dollar occurred in Transco's two Zone 6 pools and in Zone 5 (Mid-Atlantic).
Prompt-month futures appeared to have little sense of direction, foundering on either side of flat before ending the day down 1.8 cents (see related story).
Pipeline restrictions against negative imbalances were growing again in the East (see Transportation Notes), but in the West PG&E was implementing a high-inventory OFO.
The general forecast for this week will remain on a geographic divide: mostly below-normal temperatures in the East and moderate to chilly conditions in the West.
More immediately, though, slight warming trends would remain in effect through early in the weekend for the Northeast and South, with cold but mostly static temperatures continuing in the Midwest. However, most areas east of the Mississippi could expect to begin this week in a frigid mode. The same forecast applied to the Rockies and Canada, but the rest of the West was expected to remain cool to merely chilly.
In a new projection Friday of its system weighted average temperatures, Northern said it expected them to sink to minus 4 Sunday before rebounding to the grandiose heights of plus 1 Monday. In response, the pipeline declared a System Overrun Limitation in all market-area zones for Saturday through Monday.
After dropping nearly $2 Thursday in IntercontinentalExchange (ICE) trading, Transco's Zone 6-New York pool regained nearly $1.15 of that loss Friday. However, ICE volume slipped from 260,700 MMBtu to 191,600 MMBtu.
A marketer in Texas suggested that Friday's overall softness may have been due to expectations of a short-lived cold blast early this week that will be dissipating after Wednesday. Also, there was a good chance that buyers were leaning more on winter term contracts, storage withdrawals or "a little bit of everything" in lieu of obtaining new spot supplies, he said.
The marketer said he expects higher prices Monday but didn't think much of it would be attributable to people buying imbalance makeup gas. They probably relied on storage gas to get through the weekend, he said, and will be buying mainly for current-burn heating load Monday. He added that he didn't perceive any holiday-period trading doldrums setting in yet but thinks they might start showing up toward the end of this week.
A Rockies producer said the problem in his area wasn't that the basis differential from CIG to Henry Hub having stretched to about 33 cents; it's the "absolute pricing" being so low that makes things difficult for now. Currently local heating demand is light due to relatively mild weather in the Rockies, he said.
Noting LNG prices in the $10 area at Maryland's Cove Point terminal, the producer said he was surprised that more cargoes weren't headed toward the U.S. because that was close to European LNG prices (see related story).
A bullish signal that analysts have been saying was badly needed was a decline of 13 drilling rigs seeking natural gas in the U.S. during the week ending Dec. 10, according to the Baker Hughes Rotary Rig Count. All of the drop occurred onshore, with the Gulf of Mexico tally unchanged, Baker Hughes said. Its latest count was 1% lower than a month ago but 25% above the year-earlier level.
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