Although there are quite a few parts of North America as cold as or colder than the Northeast, that region remained the only one where major heating load was having a substantive impact on prices. At nearly all other locations moderate softness was returning Tuesday.
It was hard to say definitively why a strong blast of winter cold is having such a mild price effect, but one source suggested that it could be a case of moderating forecasts for the latter half of January combined with buyers using more storage now in hopes of buying that supply back more cheaply, if necessary, when anticipated warm-ups were likely to lower prices.
The market also saw some downward pressure from relaxed concerns about wellhead freeze-offs that had failed to occur as feared in some areas.
With Florida Gas Transmission issuing an Overage Alert day in its unusually chilly market area, that was enough for Florida citygates to record the top gain of about $3.50 to the $8.90 area. Most Northeast locations still commanded higher averages among overall numbers ranging from flat to up a little more than $3.
After recent minuscule negative guidance, the cash market will get some support from Tuesday's February futures gain of 8.2 cents (see related story).
Bentek Energy analyst Dan Fox said he could find no evidence of anticipated Rockies wellhead freeze-offs in either anecdotal evidence or his sample production numbers. There was freeze-off "potential" amid such frigid conditions, he said, but none happened as far as he knew. He also noted that several pipes have started to lift their cold weather restrictions, such as El Paso saying its probability of declaring a Strained Operating Condition due to excess linepack was high.
Even though nominations through Kemmerer (WY) Compressor Station have been exceeding operational capacity between around 36,000 Dth/d and 45,000 Dth/d from Sunday through Tuesday, Northwest has not found it necessary to to renew the Recall Advisory and OFO at Kemmerer that was lifted Dec. 16.
The past couple of days have begun with strong utility buying, a Midcontinent producer said, but then pipe constraints slow down their purchases a lot. It seems there's just not enough transport out of the Midcontinent to handle all the gas that traders want to buy and move. Prices started getting a lot softer about midway through Tuesday's session, he said; bigger producers seem to have overestimated how much gas they could get into the transportation grid.
Believe it or not, even with single-digit lows in his area Tuesday and Wednesday, a Midwest utility buyer said he was "selling a little length." Utility loads are off a bit despite bone-chilling cold and nine inches of blowing and drifting snow. The buyers suspected that part of the unusually light demand was related to a fairly large number of folks being unable to get to work. Whatever, "this weather is keeping us busy!" he exclaimed.
IAF Advisors analyst Kyle Cooper is estimating a storage withdrawal of 141 Bcf to be reported for the week ending Jan. 7. Stephen Smith of Stephen Smith Energy Associates said he had slightly lowered a previous outlook for a pull of 149 Bcf to 148 Bcf.
Citi Futures Perspective's Tim Evans said he expects a 136 Bcf draw to be announced Thursday, followed by significantly larger subtractions of 241 Bcf, 201 Bcf and 177 Bcf for the weeks ending Jan. 14, Jan. 21 and Jan. 28.
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