A paralyzing concoction of snow, ice, sleet, and abnormally low temperatures for much of the East prompted a wide range of changes to the natural gas pricing matrix. A series of storms began the week in North Louisiana and by Friday residents of Philadelphia were shoveling more than a foot of snow. NGI's weekly spot gas average nationally fell $1.90 to $7.53 for the week ended Feb. 14, but the regional swings were wide, almost as wide as the variations posted by individual points.
Tennessee Zone 5 200 L posted the week's greatest individual point gain of $5.08 to average $13.79, while the PG&E Southern Border weekly price plunged $7.61 to $6.09.
Regionally the Rocky Mountains came in with the lowest weekly average of $6.02 and California was just a scooch higher at $6.08. At $6.02 Rockies prices endured a decline of $5.22 and California prices took a hit of $3.56.
South Texas ended the week at $6.29 and East Texas came in at $6.30. South Texas registered a gain of 12 cents for the week, but East Texas was down 65 cents.
South Louisiana at $6.43 was 16 cents higher, but the Midcontinent at $7.61 was down by a hefty $5.71.
The Northeast for the week averaged $9.59, a $1.28 gain, and the Midwest tallied the highest weekly average price at $10.33, but that represented a $2.21 decline.
March futures for the week rose 43.9 cents to $5.214. Thursday's Energy Information Administration storage report showed a withdrawal of 237 Bcf for the week ending Feb. 7 and reinforced the ongoing dynamic of ever-decreasing supplies. Last year 152 Bcf was withdrawn and the five-year average stands at 162 Bcf. Traders were looking for a lot more. Ritterbusch and Associates forecast a withdrawal of 225 Bcf, and a Reuters survey of 25 traders and analysts revealed an average 233 Bcf with a range of 205-263 Bcf. Bentek Energy's flow model calculated a pull of 231 Bcf.
Storage now stands at 1,686 Bcf, the lowest in about a decade for this time of year. 1,686 Bcf is 863 Bcf less than last year and 631 Bcf below the 5-year average. In the East Region 106 Bcf were withdrawn and in the West Region 42 Bcf were pulled. Inventories in the Producing Region fell by 89 Bcf.
In Friday's trading weekend and Monday gas gained ground with New England leading the march higher by posting multi-dollar gains. Most points were solidly in the black and gained about a quarter. A few locations in the Upper Midwest outside the Chicago Citygates slipped into the loss column, but gains were seen in the East, Midcontinent, Rockies and California. Futures managed to hold on to the bulk of Thursday's gains, and March settled 0.9 cents lower at $5.214 after trading as high as $5.389. April was down 5.5 cents to $4.577.
Futures traders saw the day's lack of further upward movement as indicative of softer pricing early in the week. "I heard the forecast got a little milder for the 10 to 14-day period, so I'm looking for the market to come in a little bit lower on Tuesday, in the front, anyway," said a New York floor trader. "I'm thinking we'll be trading $5.05 to $5.10."
Analysts also see a fundamental case for near term lower prices but admit that the technical environment points higher. In closing comments Thursday, Jim Ritterbusch of Ritterbusch and Associates said he sees the market "discounting one more sizable withdrawal with next week's data. Nonetheless, we are still viewing a significant warm-up during the next couple of weeks as a major inhibitor to further upside price follow-through. At some point, the highly likely dynamic of deficit contraction will need to be prioritized as the main driver of price over low supply levels. Assuming continued warm temperature expectations into next week's forecasts, we can easily build a case for a renewed price downturn to around the $4.50 area per the March contract.
Ritterbusch admitted to "a lack of significant chart resistance until about the $5.40 area and the psychological impact of a major winter storm currently moving across the northeast region. All in all, we still anticipate much pushing and pulling amidst the conflicting influences of a static factor of low storage levels and the dynamic influence of a major temperature warm-up across the balance of this month."
Following Thursday's Energy Information Administration storage report and subsequent 40 cent March advance futures traders not surprisingly saw the market in bullish mode. "This was definitely a bullish move, and volume was 179,000 contracts just in the March," said a New York floor trader. "At this point $5 is good support, and $5.25 is my next target higher. The market basically rallied up throughout the day. The bid offer spread was just one or two ticks the whole day."
Friday forecasts of steadily declining temperatures over the weekend kept a firm bid under prompt gas at New England points. Forecaster Wunderground.com said, Hartford, CT's Friday high of 35 Friday was expected to hold Saturday, but by Monday the high was seen only reaching 28. The normal high in Hartford at this time of year is 38. Providence, RI's Friday high of 39 was predicted to slide to 36 Saturday and 29 by Monday. The seasonal high in Providence is 40. New Haven, CT's Friday high of 42 was anticipated to slide to 36 Saturday and 30 by Monday, 7 degrees short of its normal high for mid-February.
The National Weather Service in New York City said the northern portions of the East Coast could expect a series of weather events over the weekend. "[R]apidly intensifying low pressure will pass to the south and east of the region Saturday into Saturday night. A very weak low moves in and dissipates Sunday afternoon and evening...with strong high pressure building in behind it. This lasts through Monday before quickly shifting offshore Monday night.
"A frontal system moves in late Monday night through Tuesday morning...exiting Tuesday afternoon. This gives way to high pressure from the south and west building in. A series of lows then pass north and west of the region middle to late week."
A Northeast marketer cited the $22 paid for weekend gas at Algonquin as an indication that "there's nothing left in the tank. There is no storage at Dawn."
Buyers have been scrambling of late. In its February Short Term Energy Outlook, the Energy Information Administration (EIA) reported increased imports from Canada. "Imports are 22.8% greater than the same week last year," EIA said in its Natural Gas Weekly Update. "While U.S. natural gas imports in general have declined over the past several years, they still are an important source of supply in times of high demand. This has been particularly true this winter. LNG sendout, while small, has also risen this winter, with supplies this week coming from the Elba Island terminal in Georgia and the Everett terminal in Massachusetts."
The Northeast marketer noted that Algonquin February basis went for $32 and said, "I imagine that people would have sold whatever they could at that price, but March forward Algonquin is $13 to $14 and I don't think that will attract many LNG cargoes [into Canaport] at that price. I don't know if you attract any more cargoes, but it all depends on the price in Brazil and other world ports compared to the Northeast. Who knows, maybe the market will go higher."
The marketer said the high prices for weekend and Monday gas were just buyers going hand-to-mouth. "Everyone is just buying what they need. Nobody gets long at $22 gas."
Weekend and Monday deliveries at the Algonquin Citygates rose by $4.69 to $23.04, and deliveries to Iroquois Waddington gained $2.89 to $16.36. Gas on Tennessee Zone 6 200 L added $3.76 to $21.42.
Rises at Mid-Atlantic points were more subdued. Gas for weekend and Monday delivery to Transco-Leidy added just 2 cents to $2.87, and deliveries to Dominion gained 7 cents to $5.30. Packages on Tetco M-3 Delivery climbed $1.42 cents to $7.31, and gas bound for New York City on Transco Zone 6 jumped $2.74 to $8.97.
Prices in the Midcontinent posted solid gains. Gas on ANR SW rose by 11 cents to $5.37, and at the NGPL Midcontinent Pool weekend and Monday packages gained 16 cents to $5.33. Deliveries to OGT climbed 20 cents to $5.37, and gas on Panhandle Eastern added 8 cents to $5.33.
Some weather forecasts turned cooler late in the week. WSI Corp. in its six- to 10-day outlook Friday showed above-normal temperatures throughout the area currently being blasted by freezing rain and snow, but in the 11- to 15-day forecast below-normal temperatures are predicted. "[Friday's six- to 10-day] forecast has trended cooler across the eastern two-thirds when compared to the previous forecast. Confidence remains near to slightly below average standards as model show fair large-scale agreement, but there are a number of technical differences and timing issues at hand.
"Albeit a number of timing issues between the models, which could result in a faster or slower mean progression of the pattern, there remains an overall risk to the warmer side over the East with colder risks to the forecast across the Plains late."