While winter weather finally made an appearance in the Northeastand Midcontinent last Friday, major price movement in most marketareas did not. Sources in the Midcontinent and Northeast citedweather forecasts calling for major temperature warm-ups for thisweek as the major reason for the market’s inability to rise.
“I don’t know what’s going on,” an Omaha-based trader said.”When it’s hot in the winter, prices go up. When there is asnowstorm, prices stay flat. Things should get really tested nextweek, however. We’re supposed to see 60- degree weather in theMidcontinent by midweek, and that should stir things up.” He saidMidcontinent markets were flat to slightly softer than Thursday’slevels, despite a snow storm that dumped more than six inches inOmaha.
The Northeast price increases usually associated with snow andsleet failed to materialize as well. In fact, New England citygatesdropped as much as 25 cents as prices continued to correct themselvesfrom the jumps associated with the Con Edison nuclear power plantoutage that occurred earlier last week (see Daily GPI, Feb. 16).
While bullish weather failed to raise prices in the Midcontinentand Northeast, bearish weather failed to depress prices in the GulfCoast. “I don’t see any correlation between these prices andweather,” another source said. “That leaves supply and storage asthe remaining main factors. Both of those look pretty bullish rightnow. We’re expecting a small adjustment sometime [this] week, butoverall I’m still a bull.” Prices at the Houston Ship Channel andKaty Hub were flat Friday despite temperatures that peaked into the80-degree plateau in Houston.
While weather was the story in the East and the Midcontinent,western traders said too many buyers with short positions was thereason for the uptick at the California border. “The Californiaborder was strong all week,” a source said. “I think a lot of thatstrength has to do with the fact that it’s a monthly balancingpipe. People were going short early and they got imbalanced. Nowthey’re trying to even things out by buying.”
A Florida buyer called the price activity on Sonat “stagnant”after finishing in the mid $2.60s for the second straight week.”It’s just like the screen,” he said. “It can’t decide which way tobreak.” The recent demand increases on Florida Zone 2 againasserted themselves as prices on that pipe increased a few centswhile Florida Gas Zone 3 stayed flat.
Turning his eyes to the upcoming bidweek, a Midcontinent sourcesaid the outlook is not very positive. “Temperatures are expectedto be way up in the Midcontinent right about the time bidweekstarts, and other market areas seem to be higher than they shouldbe. To me, all indicators so far are pointing down.”
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