Prices fell at a large majority of points Wednesday as North America's latest siege of frigid weather was expected to be less severe and of shorter duration than the one that proved to be so troublesome a week earlier. Many traders were looking ahead to next week when the forecast calls for above-normal temperatures in much of the eastern two-thirds of the U.S.; moderation will already be under way in many areas by the weekend.
Losses tended to range from 2-3 cents to a little more than 80 cents, with most of the larger ones concentrated in the Northeast and Midcontinent/Midwest markets.
Several few scattered locations, primarily in the Southwest basins, were flat to up a little more than $1.05. Somewhat curiously, with major softness prevalent in the Northeast, Transco's Zone 6-New York pool was the only point to see a triple-digit spike to land its average in the mid $11.60s. Although Iroquois Zone 2 fell about 30 cents, it still maintained a $10-plus average.
Tuesday's 6.4-cent drop by March futures was another bearish factor for the cash market Wednesday. However, it will have a near-negligible amount of prior-day screen support Thursday after the March contract meandered slightly to either side of flat during the morning before finally ending a losing streak by closing out the day a mere 0.4 cent higher (see related story).
General weather trends for Thursday will see modest temperature declines in the Northeast and much of the South, but the Midcontinent, Midwest and Rockies should find their thermometer mercury levels inching higher.
At this time last week, with field production constraints caused by frozen wellheads and heavy market-area demand, Transwestern had issued a low-linepack Alert Day (prompting an OFO by LDC customer Southwest Gas), and El Paso was about to upgrade a Strained Operating Condition based on low linepack to a force majeure-accompanied emergency Critical Operating Condition.
As of Wednesday (Feb. 9), other than Transwestern reporting underperformance at a few locations on its system, neither pipeline appeared to be having serious problems with the new build-up of frigid weather. El Paso said its linepack was at normal levels.
PG&E's issuance of a low-inventory OFO (see Transportation Notes) failed to keep the PG&E citygate from falling about 4 more cents, but IntercontinentalExchange (ICE) said volumes traded at the point on its online platform jumped from 1,262,100 MMBtu Tuesday to 1,420,000 MMBtu Wednesday.
The PG&E OFO occurred despite a sizeable increase in citygate volumes on Wednesday. Bentek Energy's U.S. Natural Gas Hub Flows chart shows the PG&E citygate recording one of the biggest flow gains Wednesday of 246,000 MMBtu to 3,026,000 MMBtu (9%). Its increase was surpassed only at the Southern California border, which rose 279,000 MMBtu to 3,087,000 MMBtu (10%). Bentek said the biggest flow declines were 526,000 MMBtu at Texas Eastern M-3 (11%) and 334,000 MMBtu at Transco Zone 4 (13%).
Northern Natural Gas kept a string of System Overrun Limitations (SOL) in all market-area zones intact through Thursday, when its average system temperature is expected to be 12 degrees, but the SOLs are likely to end after that due to projections of the average rising to 22 Friday and 28 Saturday.
A Midcontinent producer said softening of prices in his region had returned them to what he considered more "reasonable levels" in the $4.20s and $4.30s. His area had another 7-8 inches of snow on the ground and it was still coming down, but, he proclaimed cheerfully, "The sun is starting to peek through!" The Midcontinent still had a few wellhead freeze-offs to contend with, he said, but it wasn't as bad as last week.
In a somewhat similar vein, a marketer in the Upper Midwest said it was still cold and there was snow on the ground, "but it's sunny." It looks like there's a chance of being reminded of springtime before next week starts, she said. That means work should get a little easier with fewer calls coming in from cold clients asking for more spot gas purchases, she added.
IAF Advisors analyst Kyle Cooper predicts that a storage withdrawal of 192 Bcf will be reported for the week ending Feb. 4. Tim Evans of Citi Futures Perspective had a similar outlook for a 193 Bcf pull, which he said is likely to be followed by draws of 211 Bcf, 107 Bcf and 87 Bcf for the weeks ending Feb. 11, Feb. 18 and Feb. 25, respectively.
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