For a change Monday's trading featured most Northeast locations taking big dives while prices recorded fairly strong increases at a large majority of other points. Most sections of the North American market can expect to endure some severe winter weather this week.
The Midcontinent garnered the lion's share of the biggest advances, with prices advancing from the mid-to-high- 40 cent range. Losses in the Northeast/Mid-Atlantic generally were a little more than 55 cents to nearly $2.75, with Texas Eastern M-3 taking the biggest fall.
Although prompt-month futures barely budged Friday, they will have a bit of support for Tuesday's cash market after the March contract rose 9.7 cents (see related story).
Most areas are expected to start getting early samples by late Tuesday of major winter weather that AccuWeather.com is calling the "Groundhog Day" storm (see Daily GPI, Jan. 31) because much of it is likely to be centered around Feb. 2.
Early Monday Northern Natural Gas had extended a System Overrun Limitation (SOL) for all market-area zones, previously set for Sunday and Monday, into Tuesday (see Transportation Notes). It was not surprising at all late that afternoon when the SOL was declared to remain in effect through at least Wednesday when Northern's bulletin board projected that the average system temperature Wednesday would be minus one degree.
The last half of last week Westcoast had a high-linepack OFO in place because of excess supplies on its system. The situation had certainly changed during the weekend as the pipeline's bulletin board reported that low linepack was now the dominant condition.
Despite IntercontinentalExchange (ICE) saying Texas Eastern M-3 quotes had fallen a little more than $2.70, it added that M-3 volumes traded on the ICE online platform had jumped from 383,000 MMBtu Friday to 478,400 MMBtu Monday.
However, accompanying a price rise of about 27 cents at the Chicago citygate (which should be seeing considerably harsher weather than M-3 later this week), ICE said its Chicago volumes had taken an even larger leap from 619,000 MMBtu to 1,022,000 MMBtu.
As recently as the trade date of Jan 21, the CIG-Henry Hub basis spread had been as wide as 44 cents ($4.28 CIG vs. $4.72 Henry Hub). A Rockies producer thought it amazing, but largely attributable to frigid forecasts in his area, that CIG held a premium of 2-3 cents in prices for Tuesday over the Henry Hub average. There very well could be some wellhead freeze-offs in the Rockies this week, he said; after all, even Denver, which doesn't get quite as cold as the production areas, was predicted to stay below zero Tuesday.
Monday's announcement of a big CNOOC Ltd. investment in Chesapeake Energy operations in the Denver-Julesburg and Powder River basins (see related story) is just more icing on the cake from a recent frenzy, not by just the Chinese but including many others, in getting a taste of profits from Powder River operations, the producer said. He said he's also been kept super-busy in recent weeks fielding inquiries about the prolific Niobrara formation.
An industrial end-user said there are a lot of businesses that make heavy use of natural gas in their operations that are thriving currently amid an overall down economy because of relatively cheap gas prices. Bidweek supplies were readily available and not very costly compared to some past occasions, he said, adding that gas prices "look pretty range-bound for quite a while."
Seven drilling rigs were added to the U.S. search for gas during the week ending Jan. 28, bringing the total to 913, according to the Baker Hughes Rotary Rig Count. The onshore count increased by eight, but one unit departed the Gulf of Mexico. The latest Baker Hughes tally was 1% lower than a month ago but up 6% from the year-earlier level.
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