With few exceptions, all points scored at least double-digit gains Monday with some points putting in dollar-plus moves as cold weather sliced into the West over the weekend and was forecast to march eastward. On average gains were 28 cents overall, with the volatile Northeast points scoring the most gains. At the close February natural gas futures had added 4.6 cents to $3.373 and March was higher by 4.2 cents to $3.378. February crude oil gained 58 cents to $94.14/bbl.
A cold snap pummeling the Midcontinent was welcome news to producers as prices rose, but expectations were that it wouldn’t last that long. “We are pleased with it and prices got a little higher [during the day] but fell off a little bit,” said a Midcontinent producer. “There is a lot of demand on OGT [Oklahoma Gas Transmission] and other pipes, but the problem is that the weather is going away in two days. There was a lot of activity, but it was same day demand.
“Gas is flowing and prices in Oklahoma got close to Nymex, which is very good for people who like storage plays since they can now sell it. Another day or two [weather] will normalize and it should be 60 degrees by the weekend,” he said.
Forecasters are calling for colder temperatures later this week. “While a large part of the West got a taste of cold weather this past weekend, one blast of arctic air will roll quickly from the Southern Canada Prairies to New England later this week,” said AccuWeather.com meteorologist Alex Sosnowski. “Another more extensive blast may follow next week…
“Additional pushes of arctic air forecast to come to the Plains and Northeast are part of the result of sudden warming that took place high in the atmosphere (the stratosphere) earlier in the month near the North Pole. The warming causes weather systems to shift around in the lower part of the atmosphere in the polar region and drive frigid air farther south. Sometimes these frigid air masses reach the mid-latitudes.”
Deliveries to NGPL’s Midcontinent Pool were 19 cents higher at $3.39 and on ANR SW Tuesday gas added 17 cents to $3.40. Gas priced on OGT gained 19 cents to $3.36 and parcels on Panhandle Eastern gained 21 cents to $3.38. Deliveries to the NGPL Amarillo Line rose 22 cents to $3.52.
The expected cold air was enough to drop forecast highs in major eastern cities by double digits. AccuWeather.com predicted the high in Boston Monday of 60 would fall to 40 on Tuesday and Wednesday, and fall further Friday to 33. The normal high in Boston this time of year is 36. New York’s Monday high of 57 was expected to drop to 43 Tuesday and Wednesday before slipping to 36 on Friday. The normal high in New York is 38.
Deliveries to Algonquin Citygate Tuesday soared $1.77 to $5.38 and gas into Iroquois Waddington gained $1.01 to $4.71. Gas on Tennessee Zone 6 200 L jumped $1.72 to $5.38.
Farther south the prices didn’t jump as high. Tetco M-3 came in at $3.67, up 35 cents and deliveries on Dominion were up 24 cents at $3.31. Gas headed for New York City on Transco Zone 6 added 58 cents to $3.91.
Soaring next-day power prices also lifted cash quotes. Tuesday deliveries to the New England Power Pool’s Massachusetts Hub jumped $12.89 to $49.28, and peak power to the New York Independent System Operators Zone G (eastern New York) delivery point rose $10.60 to $47.00, according to the IntercontinentalExchange.
Futures traders were not surprised by Monday’s advance. “This $3.25 to $3.45 area always seems to result in the same trading pattern,” said a New York floor trader. “I think the market is a little toppy at the $3.41 to $3.43 area. It just touched $3.41, so maybe it is getting a little thin up here.”
In Oklahoma, producers may see 60-degree weather by the weekend, but weather forecasts continue to call for bone-chilling cold to invade eastern and Midwest energy markets. Commodity Weather Group (CWG) in its six- to 10-day outlook calls for widespread below-normal temperatures north of a sinuous arc extending from Washington to Nebraska to Georgia. Above-normal temperatures are expected for Southern California and the desert Southwest.
“Over the weekend, the models held to delivering an impressive piece of Arctic air into the U.S. for the upcoming six-10 day period with the primary impacts in the Midwest and East,” said CWG President Matt Rogers. “Some debate continues as to how much of this cold also reaches the South as it appears that the trajectory of the coldest air more from the Midwest to the East instead. Temperatures in many locations along the path should (only briefly) reach the coldest levels of this winter so far and should be colder than peak intensities from last year.
“The latest guidance offers more pattern variability in the 11-15 day with return of warmer weather, but the majority is seen in the South. The Midwest and East gradually moderate/warm toward mid 11-15 day before another new cold push starts setting up late in the period to affect the Midwest first.”
In his work with Market Profile, Tom Saal, vice president at FC Stone INTL in Miami, is looking for the market to test last week’s value area at $3.159-3.311 before moving on and testing a second value area at $3.715-3.607. Saal is not specific in his timing, but typically value areas are tested within the next week.
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