Natural gas cash prices added a little more than a nickel on average Monday with most points following the stronger screen, but California quotes rose as a mini cold snap enveloped the area along with some temporary outages.
A handful of Northeast locations weakened as moderate temperatures and low power demand came into play. At the close of trading January had risen 4.4 cents to $3.358 and February had added 4.0 cents to $3.398. January crude oil gained 47 cents to $87.20.
Next-day gas prices in California rose as cooler weather and outages combined forces to send prices up by double digits. “The only place that has cold weather is here. It is certainly cold by LA standards, and it is expected to last another 10 days,” said a southern California marketer. He added that there was also some maintenance scheduled for the next two days at Needles, CA, and “that is causing some angst at Needles, SoCal and Topock. Needles was trading about $3.24, and the other points were trading $3.40. Needles should have been at $3.40 or somewhere in there.”
AccuWeather.com predicted that California points would see temperatures well below normal. Monday’s high in Los Angeles of 62 was expected to slide to 61 on Tuesday and 59 on Wednesday. The seasonal high in Los Angeles is 67. San Francisco’s Monday high of 59 was anticipated to fall to 52 Tuesday and 53 on Wednesday. The normal high in San Francisco at this time of year is 56.
Quotes at Malin rose a stout 14 cents to average $3.33, and Tuesday deliveries to the PG&E Citygates rose about 13 cents to $3.72. At the SoCal Border, next-day prices came in 9 cents higher at $3.43, and at SoCal Citygates Tuesday parcels rose 11 cents to $3.63. Gas on El Paso S Mainline added 19 cents to $3.57.
On Northeast pipelines prices were also following the weather as forecasts called for above-normal temperatures at least through Tuesday. “New England is a function of electrical load and warm weather,” a marketer said.
AccuWeather.com predicted Monday’s high in Boston of 46 would rise to 53 on Tuesday and slip to 44 on Wednesday. The normal high in Boston is 41. In New York City the high Monday of 48 was predicted to rise to 56 on Tuesday and ease to 49 on Wednesday. The seasonal high in New York is 43.
IntercontinentalExchange reported peak power at the New England Power Pool’s Massachusetts Hub fell $1.95 to $31.55/MWh, and at the PJM West Hub next-day power eased 36 cents to $34.17/MWh.
Quotes on Algonquin for Tuesday deliveries dropped 16 cents to an average $4.56, and into Iroquois Waddington gas was seen at $4.10, or 18 cents lower. Deliveries to Tennessee Zone 6 200L dropped 24 cents to $4.47.
Eastern points showed gains. Gas on Dominion gained about 12 cents to average $3.19, and deliveries to Tetco M-3 were 11 cents higher at $3.42. The price of gas headed for New York City on Transco Zone 6 was $3.43, higher by about 7 cents.
Futures trading was uninspired. “We were in a five-cent range for most of the day,” said a New York floor trader. He added that about 2,200 January block trades went through on ClearPort and about 350 February blocks were traded. “We’re in this range from $3.25 to $3.40, and it doesn’t look like we’ll see much different for the rest of the year.”
Weather forecasts changed little overnight in the near term, but longer-term forecasts suggest some cooling. Commodity Weather Group in its 11- to 15-day outlook shows a broad ridge of below-normal temperatures from Idaho to South Carolina and southern Pennsylvania to New Mexico.
“The short term is coming in same-to-warmer for most areas of the eastern two-thirds of the nation with mostly warm-sided storm tracks and little to no access to cold air,” said Matt Rogers, president of the firm. “The story begins to change a bit in the six-10 day and especially by the 11-15. The European and American ensembles agree to flip the pattern in the Gulf of Alaska (a big change especially for the more skillful Euro ensembles), which opens the door for better cold air access to the strong supply in central/western Canada.
“The details are still murky, but it looks like a cold push drops through the Midcontinent late in the six-10 day and expands into the East early in the 11-15. A second cold push is possible in the Midcontinent by late, but we remain more cautious yet. There are still big questions about the durability of the new pattern (more than just a week?).”
Some analysts say we have been here before. “Temperatures are still forecast to turn colder in the week ending Dec. 28, but the market has seen the arrival of the cold pushed back several times and may be losing confidence that any particular schedule will hold,” said Tim Evans of Citi Futures Perspective in New York in closing comments to clients Friday.
Others think the forecast may be able to at least stem the selling. “This market remains driven primarily by the weather factor, and we are viewing weekend updates as possessing a neutral flavor in contrast to a decided negative tilt that pervaded through most of last week,” said Jim Ritterbusch of Ritterbusch and Associates. “While such a shift in the weather outlook may prove insufficient to spark much of a price advance, we feel that it may be able to force a bottom into the market with last week’s lows providing support in this week’s trade.”
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