There were a few holdouts for higher prices on Wednesday, but the verdict was unanimous Thursday: declines across the board, including several multi-dollar plunges in the Northeast. As expected, this week's burst of cold proved to be relatively brief. Warming trends will either be already under way or beginning Friday in most of the U.S., Eastern Canada and portions of Western Canada.
Most losses were in double digits as prices fell between about a nickel and the $4.80 area. Some of the smallest dips were concentrated in Western Canada and California, while only a couple of the Northeast's triple-digit plunges were less than $2.
The Energy Information Administration's report of a 209 Bcf storage withdrawal during the frigid week ending Feb. 4 was near the high end of analyst expectations ranging from the low 190s Bcf to about 213 Bcf, and created a current deficit to the five-year average inventory. Apparently Nymex traders had already discounted a seemingly bullish large pull, which was expected by many, as they sent prompt-month futures 5.8 cents lower on the day (see related story).
Parts of the Carolinas and Georgia could expect another 1-2 inches of snow Thursday before a winter storm moves out to sea. For the rest of the South the forecast is generally dry and cold, with temperatures rising gradually through the weekend. Highs will begin moving above freezing again Friday in the lower end of the Northeast, but despite modest warming trends most of the rest of the region and the Midwest will remain completely below freezing until some time during the weekend.
Most of the western U.S. and Canada was already peaking above the freezing level Thursday and should continue to see mercury levels inch even higher during the weekend.
Despite the general warm-up, there were a few problems remaining Thursday, according to Reuters news service. It said Oklahoma intrastate Enogex was operating at low pressure because of reduced supplies from frozen wellheads. Reuters said AccuWeather.com had reported that temperatures fell below zero for the first time in 15 years Thursday.
The New York pool of Transco's Zone 6, which had been the only location to record a dollar-plus gain Wednesday, was way out in front in leading Thursday's downhill charge. It dropped nearly $5, according to IntercontinentalExchange (ICE), but volumes traded on the ICE platform were up a little from 116,200 MMBtu Wednesday to 123,600 MMBtu Thursday.
The Electric Reliability Council of Texas (ERCOT) reported a new Lone Star State record for winter peak demand with 57,282 MW being used in its grid area between 7 and 8 a.m. CST Thursday (see related story). But after falling 3 cents Wednesday, Houston Ship Channel quotes dropped about 16 cents further Thursday on ICE, with volumes traded shrinking from 302,400 MMBtu to 257,600 MMBtu. ERCOT said it was canceling its "Power Watch" plea for electricity conservation Thursday.
PG&E is extending its low-inventory OFO through Friday with looser imbalance tolerance. Normally a supply shortfall would tend to boost prices and volumes. But ICE said not only did the PG&E citygate soften by about 4 cents, but also its ICE-traded volumes took a big slide from 1,420,000 MMBtu Wednesday to 1,064,700 MMBtu Thursday.
Just about all the other significant pipeline restrictions will have been lifted before the weekend starts (see Transportation Notes).
Although a warm-up is on its way, the current week probably won't be the 2010-2011 winter's "last hurrah," said a Rockies producer. It's possible that a new surge of frigid conditions could return as late as March or even April; of course, at that time a cold blast would be fairly diluted compared to what's happened during the past two weeks, he added.
The producer expressed surprise that prices are dropping so far and fast, saying the cold isn't going away entirely next week, and obviously this week's weather is going to yield another big pull in next Thursday's storage report.
Counting the start-up of Bison Pipeline, the scheduled completion of Ruby Pipeline and Kern River's expansion, the increases of takeaway capacity in the Rockies this year are approximately equal to adding another Rockies Express, he said, adding that even with the shale plays, some producers are dubious about having enough Rockies production to fill this new capacity. "But we prefer to have too much [takeaway capacity] than too little."
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