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Cash Holds Firm; Futures Shoot Higher On Storage Data
Cash prices added less than a penny overall in Thursday’s trading as traders got their deals done ahead of the release of government inventory figures.
Gains of as much as a dime were noted in the nation’s heartland as forecast temperatures Friday were expected to be as much as 15 degrees below normal. The Energy Information Administration (EIA) reported a build of 31 Bcf in its weekly inventory report, and futures prices rallied sharply. Late-cycle cash trading also reflected buoyant futures. At the close, the May contract had risen 18.7 cents to $4.401, a new 20-month high, and June was up by 18.9 cents to $4.432. May crude oil added $1.05 to $87.73/bbl.
Quotes across the Midwest jumped as Friday temperatures were anticipated to be well below seasonal norms. In Chicago, which got pelted with more than five inches of rain Wednesday, Thursday’s high of 70 was expected to drop to 44, according to AccuWeather.com. By Saturday temperatures were expected to make it to 50, 10 degrees below the normal high. Lincoln, NE’s Thursday high of 38 was predicted to rise to 50 on Friday and 64 on Saturday, still below the seasonal high of 65. Colorado Springs’ high of 33 Thursday was forecast to rise to 46 Friday and 58 Saturday. The normal high in Colorado Springs is 60 at this time of year.
Tom Skilling, a meteorologist at the Chicago Weather Center, said Chicago Friday would be “Mostly cloudy, blustery and 28 degrees colder. Highest temperatures at March-levels in the lower and middle 40s [would be] falling into the upper 30s later in the afternoon. Showery or sprinkly at times. Partly cloudy at night. West to southwest winds 15 to 30 mph. Overnight lows drop to the lower 30s in the city and upper 20s coldest inland locations.”
On Alliance, gas was quoted for Friday delivery at $4.36, 15 cents higher, and at the Chicago Citygates next-day gas came in at $4.38, 11 cents higher. On Northern Natural, Ventura packages were seen at $4.30, 10 cents higher, and at Demarcation gas for Friday was up 5 cents to $4.29.
Northeast traders admitted that the higher Nymex prices were likely to impact their cash trading. “Later-cycle intraday trading on Tennessee Thursday traded as high as $4.90, and it traded as low as $4.65 before the number came out,” said a Northeast marketer. “Next-day Henry [cleared swap] on IntercontinentalExchange is trading at $4.405 already, and that is because of the screen.
“The East Coast won’t see the cold, shifting weather. It will cool down some and get more normal but won’t see the big shifts that occurred all the way to Texas.”
Cash quotes at Gulf points moved little prior to the EIA report. Henry Hub Friday deliveries were seen at $4.23, down a cent, and ANR SE came in at $4.17, up 3 cents. Quotes on Texas Eastern E LA were at $4.14, up a cent, and on Columbia Gulf mainline next-day deliveries rose 2 cents to $4.19.
East and Northeast points slipped. Deliveries to the Algonquin Citygates fell 11 cents to $4.54, and on Iroquois Waddington Friday packages were quoted at $4.83, up a cent. Gas on Tennessee Zone 6 200 L slipped 6 cents to $4.49.
On Dominion Friday parcels came in at $4.18, down 3 cents, and on Tetco M-3 next-day deliveries were seen at $4.34, 4 cents lower. Gas destined for New York City on Transco Zone 6 was flat at $4.38.
Futures trading volume was heavy. “We did 207,000 contracts in the May and 56,000 in the May-June spread,” said a New York floor trader.
Those are big numbers, and the May-June spread is $3.00 bid at $3.10 whereas before it was 4 or 5 cents. “I’m thinking Friday the market will come off only because it’s the last day of the week, there will be some liquidation, and there is no [eastern] weather in sight,” the trader said.
The release of storage data by the EIA caught many by surprise and showed the first injection of the storage season, which is already 66 Bcf behind five-year average inventory levels. Last year, 21 Bcf was injected, and the five-year average stands at a 39 Bcf pace. For the week ended April 12, most analysts are in the mid to upper 30 Bcf range.
A Bloomberg survey showed an average 36 Bcf and a Reuters poll of 24 traders and analysts revealed a 34 Bcf increase, with a range of estimates from 15 Bcf to 45 Bcf. Bentek Energy, utilizing its flow model, predicted a 38 Bcf build.
Pundits were thinking there wouldn’t be much of a surprise when the data was released. “We’re not feeling it this week. Our Metro desk Consensus Average this week is a few Bcf higher [38 Bcf] then the rest of the big surveys by 3-4 Bcf, and we think this number should easily be within 5 Bcf of the tape. Where the other big surveys are in the 33-35 Bcf neighborhood, we see the bias as trending up, closer to 40 Bcf,” said John Sodergreen, editor of Energy Metro Desk.
Not much change on the weather front. WSI Corp. in its six- to 10-day forecast Thursday showed a broad fairway of below-normal temperatures from Canada to Mexico and Utah to Virginia. “Temperatures are slightly warmer over portions of the interior central U.S. when compared to [Wednesday’s] forecast.”
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