A frigid weekend in many sections was becoming a distant memory for many people who thought they had already seen too much winter already. Spot gas demand was dropping, and it was quite possible that more storage supplies were being substituted in its place, resulting in substantial declines in numbers across the board Tuesday.
As has been the case nearly every day in recent weeks, Northeast citygates have made the biggest movements whether up or down. There weren't any declines in less than double digits amid losses ranging from a little more than a dime to the $1.45 area.
Somewhat curiously, Westcoast Station 2 recorded the smallest dip even though the pipeline was reporting high linepack systemwide.
The cash market will have to continue getting along with negative screen guidance after February futures began their three-day countdown to expiration with a decrease of 10.7 cents (see related story).
Although subfreezing lows remain subfreezing in many locations, highs from the upper 30s to the 50s are keeping gas demand fairly subdued for now. It's uncertain whether a new snowstorm taking aim at the Northeast will do much to arrest the region's recent price dive.
Of late Katy has been a highly popular production-area trading point on the IntercontinentalExchange (ICE) platform, exceeding 1,000,000 MMBtu on all of the last three days of last week to wind up with 1,243,400 MMBtu in transactions Friday. Then it topped even that Monday, recording a gain of about 3 cents amid whopping volumes of 1,646,200 MMBtu, ICE said.
However, Katy started retracing its path downward as nearly the entire market was softening Tuesday. Its average price fell near 30 cents and ICE trading volumes fell back to 919,600 MMBtu.
A Gulf Coast producer doesn't expect any price rallies to return this week, saying he didn't think there would be enough cold weather. It was a slow start to bidweek Tuesday, he said, with his company just getting "trickles" of deal talks going so far. He reported early index-based deals of Tennessee Zone 0 flat and Transco Station 85 plus 1-2 cents. The producer noted that Station 85 over the years has displaced Station 65 as the main production-area trading point on Transco, explaining that it was because all the Perryville Hub volumes tend to head toward Station 85 now.
Another Gulf Coast trader said she had already finished February business, doing nearly everything at index flat, although a Trunkline Zone 1 package was at index minus 0.25 cent. She said most everything else she saw in Louisiana went for index flat to minus a quarter cent. She said she was glad her company finished early because bidweek numbers seemed to have started weakening. She thought more buyers using storage was chiefly responsible for that.
Strategic Energy & Economic Research's Ron Denhardt projects a storage withdrawal of 167 Bcf being reported for the week ending Jan. 21. IAF Advisors analyst Kyle Cooper also looks for a 167 Bcf draw. Stephen Smith of Stephen Smith Energy Associates expects a moderately higher volume of 172 Bcf, which he said replaced a previous estimate of 170 Bcf.
Tim Evans projected a significantly smaller pull than the others of 158 Bcf, but looking ahead he sees much larger withdrawals of 211 Bcf, 206 Bcf and 184 Bcf for the weeks ending Jan. 28, Feb. 4 and Feb. 11, respectively.
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