Cash prices on average gained 33 cents overall Friday, but if the volatile East and Northeast are factored out, the average rose 16 cents. Gains were widespread, and Midwest points showed weather-driven strength. At the close February had risen 7.2 cents to $3.566 and March was higher by 7.0 cents to $3.565. February crude oil added 7 cents to $95.56/bbl.
“Everybody seems to be getting their gas, and prices aren’t $30-40,” said a Canadian marketer. “There is enough gas and Repsol seems to be cranking it up pretty good. I wouldn’t be surprised if they did 500,000-600,000 Dt/d for the next several days. This cold weather looks like it will continue through Thursday for sure. We are finally getting a winter for the first time in two years.
“Price is all relative. When you are paying $3-4 for your gas for most of the year, current prices are not that bad. We saw $60 gas back in 2003 and 2004. Repsol has another [LNG] shipment coming in Feb. 12 and they may have another from Qatar. Those tankers carry 5.8 Bcf. They are like driving a big bomb.”
Several weather fronts are forecast to slice through the Northeast. The National Weather Service in New York City said “high pressure moves across the Tri-State area [Friday] and then settles south through the day on Saturday. Low pressure will then track across the Great Lakes on Saturday and pass to the north Sunday…sending a cold front through the region. Multiple cold fronts will move through the area for the first part of the upcoming week. High pressure moves in Thursday before a clipper system moves in for next Friday.”
Gas for delivery over the weekend through Tuesday into New York City proved to be the day’s biggest gainer. Quotes jumped $6.32 to average $15.70 on Transco Zone 6. Other points gained as well. Deliveries on Tetco M-3 gained $1.30 to $5.38 and deliveries to Algonquin Citygate rose $1.06 to $12.37.
Weekend through Tuesday gas on Tennessee Zone 6 200 L added 72 cents to $11.77 and parcels into Iroquois Waddington added 29 cents to $5.84. Dominion was seen 10 cents higher at $3.49.
Prices in the Midwest jumped as forecasts called for high temperatures in Chicago Monday to reach only single digits. “City temperatures may flirt with zero [temperatures] or a bit lower Monday night for the first time since Feb 2011,” said Weather Center meteorologist Tom Skilling in Chicago. “A sun/cloud mixed with some ice crystals or light, passing flurries [is] possible. Afternoon highs [will be] more than 20-degrees below normal. Heavier lake effect snow showers [are] possible [over] sections of the Indiana/Michigan snow belt. Northwest winds 12-24 mph [could] produce wind chills ranging in the zero to 15-below range.”
Weekend through Tuesday deliveries at Chicago Citygate gained 21 cents to $3.77 and gas into Northern Natural Gas at Ventura added a hefty 36 cents to $3.92. In the Midcontinent prices were also stout. Deliveries to the NGPL Midcontinent Pool rose 13 cents to $3.52 and gas into ANR SW added 15 cents to $3.55. Panhandle Eastern was seen 16 cents higher at $3.52.
Futures traders saw much of the day’s gains due to last minute short covering on the heels of a revised weather outlook. “The 10- to 14-day forecast got tweaked at the end of the day, and some of the weaker shorts covered,” said John Woods of J. J. Woods and Associates. “The forecast caught some people by surprise, plus you’ve got a holiday on Monday and a lot of people didn’t want to be exposed over the long weekend. I look for prices to reach maybe $3.63, but the market went out offered. You are pretty much at the top end of the range right here.
“You sell on Tuesday and call it a week. The upside here is severely limited. If it gets beyond that something has fundamentally changed the market.”
Forecasters continue to see risks to their forecasts of a cold East and warm West, which could change. “Temperatures could still run colder than currently forecast over the Midwest and East while warmer across the interior western U.S.,” said WSI Corp. of Andover, MA in its six- to 10-day outlook on Friday. “European models continue to depict a slower weakening of the amplified West ridge-East trough pattern than GFS [Global Forecast System] solutions.”
Others also hint that the cold weather-higher price dynamic may be running its course.
“[W]hile the market appears to be scooping up support off of an exceptional cold spell next week across a large swath of major consuming regions, this factor should have been largely discounted into the early week rally,” said Ritterbusch and Associates’ Jim Ritterbusch in a note. “Temperature views beyond next week [beginning Monday, Jan. 21] that extend into month’s end are beginning to acquire a bearish tint with above normal trends within the western U.S. beginning to work their way into the Midcontinent. At the end of the day, we don’t see enough cold weather within the one-two week forecasts to support price gains in nearby futures much above the $3.53 level…
“In addition to some indications of some temperature moderation toward month’s end, we will further emphasize the advanced stage of this heavy usage cycle that could begin to quell an assertive short covering trend on the part of the noncommercial entities.”
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