Prices increased by generally small amounts at nearly all locations Tuesday outside the Northeast. As a Midcontinent producer had suggested a day earlier, storage holders under no requirements of an account-emptying deadline likely were continuing to replace gas that had gotten withdrawn during the previous two weeks. And albeit minuscule, cash had a tad of support from Monday's futures rally of 1.5 cents.
It was unlikely that the weather had much to do with Tuesday's market except in the Northeast and possibly the far West. Northeast citygates were giving back most of their big prior-day gains after a brief winter storm had moved on out to seas, leading losses ranging from a couple of pennies to about 95 cents.
Meanwhile, Western Canada and much of the U.S West Coast are where most of the below-normal temperatures are currently concentrated. And single-digit lows predicted for Wednesday in Calgary and Edmonton helped explain why NOVA Inventory Transfer and Westcoast Station 2 were the only points to realize upticks of more than a dime (actually about 12-15 cents).
Moderate to cool conditions in most other areas helped to temper firmness in other areas, where quotes were flat to nearly a dime higher but around a nickel or less in most cases.
March futures will boost its support for Wednesday's cash market by climbing 5.1 cents Tuesday (see related story).
One hint about the moderate gains in the Gulf Coast market: buying for storage injections to replace some of what got withdrawn during the past two frigid weeks. After having its storage volumes reduced during two very cold weeks from 32.1 Bcf, or 54% of total capacity, on Jan. 27 to 26.9 Bcf (45%) as of last Thursday, Southern said it projects that due to mild forecasts in its service area for Wednesday storage injection requirements will exceed available capability by about 130,000 Dth/d that day. It considered the likelihood of calling a Type 6 OFO for any imbalances as unlikely Wednesday but said it was too close to call on whether such an OFO for long imbalances might be necessary on Thursday and/or Friday.
Colder temperatures are spreading inland from the West Coast to the Rockies, which had been experiencing a relatively moderate chill so far this week. A Kern River bulletin board indicated that lows at the Opal Hub area in Wyoming and at Denver would be falling from 15 and 33 Wednesday to zero and 23 Thursday, respectively. In addition, in its eight- to 14-day forecast for the Feb. 22-28 period the National Weather Service projected that by then below-normal temperatures would be everywhere west of a line from Michigan's Upper Peninsula through the Texas Panhandle into West Texas.
The level of Kern River supplies going into the SoCalGas system recently has picked up greatly. Through early this year only fairly small fractions of Kern River's capacity at the Wheeler Ridge and Kramer Junction delivery points were being utilized. In Evening cycle nominations for Tuesday's gas day, the pipeline had 463,868 Dth scheduled at Kramer Junction, leaving just 86,132 Dth of the point's total capacity of 550,000 Dth available. At Wheeler Ridge 385,517 Dth was scheduled, leaving 499,483 Dth available from total capacity of 885,000 Dth.
Northern Natural indicated a return of colder weather in the Upper Midwest approaching the weekend, although it wouldn't be nearly as severe as in the recent winter storms. The pipeline's bulletin board projected that its service area would average 32, 38 and 33 degrees (well above the normal system-weighted temperature of 22) for Tuesday, Wednesday and Thursday, respectively. However, a drop to 20 was anticipated for Friday.
El Paso said it had set the probability of its declaring a Strained Operating Condition or Critical Operating Condition to high because of linepack levels exceeding its maximum target.
Trading volumes were rising significantly on IntercontinentalExchange (ICE) at the Algonquin citygate despite softening prices. ICE said Algonquin fell just shy of 80 cents but rose in activity from 79,500 MMBtu Monday to 113,900 MMBtu Tuesday. Columbia Gas (TCO) numbers were up only 3 cents or so, but its ICE volume soared by nearly 200,000 MMBtu from 597,200 MMBtu to 792,100 MMBtu.
Not every location was seeing increased flows in ICE trading, however. The Chicago citygate rose nearly a nickel, ICE said, but the volume slipped from 938,000 MMBtu to 867,400 MMBtu.
Stephen Smith of Stephen Smith Energy Associates said his current projection of a 243 Bcf storage pull for the week ending Feb. 11 is up from a previous estimate of 228 Bcf. Citi Futures Perspective analyst Tim Evans looks for a report Thursday of a 215 Bcf withdrawal, to be followed by pulls of 69 Bcf, 76 Bcf and 111 Bcf for the weeks ending Feb. 18, Feb. 25 and March 4, respectively.
Credit Suisse's Hugh Li and Stefan Revielle said they expect the Energy Information Administration to reveal a 231 Bcf withdrawal for the week ending Feb. 11. Kyle Cooper of IAF Advisors anticipates a pull of 239 Bcf.
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