Icy weather forecasts for Thursday extending into parts of the South didn't seem to impress the cash market Wednesday as it recorded losses at all but one point (a flat Sumas), including multi-dollar declines at some Northeast points that had continued to soar a day earlier, and a whopping $11-plus plummet at the Florida citygate.
Sources cited the previous day's futures drop of 16.5 cents, the remaining high levels of storage a month and a half into the traditional withdrawal season and expectations that the recent surge of frigid weather in the eastern U.S. will be easing toward the last week of December as reasons why current cold weather was unable to keep prices from softening.
Despite Florida Gas Transmission (FGT) issuing an Overage Alert Day (see Transportation Notes), Florida citygates recorded the biggest plunge by far of more than $11 from its stratospheric average of $18 a day earlier. Otherwise, Northeast citygates led the way with triple-digit drops among losses ranging from about a nickel to the $8.15 area at Transco Zone 5 in the Mid-Atlantic, where temperatures are barely managing to trend slightly higher but still due to remain around freezing or less for the most part Thursday.
Prior-day futures guidance for cash numbers Thursday won't be quite as weak as before, but will still be moderately negative after the January contract fell another 3.3 cents Wednesday (see related story).
It will still be quite cold Thursday in the Midwest and Northeast, but both regions can still anticipate getting a little warmer. The Weather Channel said a mix of light snow, sleet and freezing rain are fairly likely in parts of Alabama, Tennessee and Georgia. Most of the West will stay generally cool to chilly, with a majority of the below-freezing lows concentrated in the Rockies and Western Canada.
Almost as soon as they had ended, new OFO-like constraints were appearing on such eastern pipes as Southern, FGT and MRT (see Transportation Notes). However, Tennessee ended an upstream OFO Critical Day 1 and PG&E is lifting a high-inventory OFO. PG&E citygate prices fell nearly a dime, according to IntercontinentalExchange, and volumes traded there on its online platform plunged from 1,037,700 MMBtu Tuesday to 715,700 MMBtu Wednesday.
A Midcontinent producer said it was obvious that futures weakness and abundant storage were the primary reasons for cold forecasts being unable to keep the cash market supported Wednesday. Also, people are already anticipating down-the-road warming late this month, he said. The fact that winter hasn't officially begun yet doesn't mean much, though, when wintry conditions have already arrived beforehand, he added.
There's a little extra heating load building in Northern California, which allowed PG&E to lift its OFO, but the area should be getting a little warmer again over the weekend, so it wouldn't be surprising to see the OFO return, a western trader said. The overall weather picture has changed little in the last few weeks, he noted; it's pretty much been a case of a relatively moderate West compared to colder-than-normal temperatures in the East.
A Midwest utility buyer described local temperatures as "brutal" in the last few days, but conditions were getting "somewhat milder" Wednesday and Thursday before turning colder again on Friday. Even with the slight moderation, one to two inches of snow were predicted for the utility service area Wednesday night, he said.
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