Yielding to winter-like weather that refuses to go away in most market areas or to acknowledge the official beginning of spring earlier in the week, prices rose at a solid majority of points Wednesday. Mild softness occurred at a few Midcontinent and western points.
The screen’s Tuesday reversal of a two-day losing streak in which April futures had fallen more than 40 cents may have had a small part in the Wednesday upticks, even if a 3.3-cent gain was rather scanty support. Cash quotes will have a little stronger futures guidance for Thursday after Nymex traders tacked on an extra 8.5 cents to the April contract Wednesday.
Most of Wednesday’s cash market numbers ranged from flat to up a little more than 35 cents. Losses were small and capped at a little less than a dime.
Despite generally widespread cold weather having been in the forecast for Wednesday, most prices were softer Tuesday. But one source speculated that with the cold showing no signs of letting up anytime soon in northern market areas, it turned cash market psychology around Wednesday. Also, he noted, Houston-area traders may have had a psychological revelation of their own after experiencing chilly conditions of their own over the past two days following a lengthy period of spring-like mildness.
Early this week it appeared that the South would be forsaking low temperatures by now, but it was not to be as well below seasonal temperatures will remain in most of the region through at least Thursday, The Weather Channel (TWC) said. Florida is the moderate exception; Florida Gas Transmission kept an Overage Alert Day notice in place Wednesday due to warm temperatures in the Sunshine State. In addition, Houston daily highs will return to the low 70s this weekend.
Unfortunately for residents of the Midwest and Northeast, relief from winter-like conditions is not on the horizon yet. Snow and near-freezing highs will continue in both regions through Thursday, according to TWC. The West will be dry for a change, but with temperatures ranging below late-March norms east of the Continental Divide to near or above average west of the Divide.
“It’s not much of a spring for us at this point,” said a Northeast utility buyer whose city was predicted to have highs just above freezing and snow both Wednesday and Thursday. That was good in a way, though, because the spell of colder weather was helping his company use up storage. It looks like there will be no trouble at all getting the utility’s pipeline storage account down to the required 30% maximum by the end of March, he said. “We’re actually buying a little gas again, but not a lot,” in the last couple of days after a lengthy period of using only storage and winter term supplies. His staff needed to get some practice in trading again, he jested.
The buyer said it appears to him that April first-of-month indexes will be higher than March’s, even though the screen’s Wednesday close at $6.953 was about 16 cents below where March futures expired.
For a Southern California source, it was time to get the surfboard ready. Stormy weather over the past couple of weeks have whipped up good surfing conditions, he said, but it’s just now getting warm enough to enjoy it. He noted that all the mountains in the area still have snow on them. There is quite a bit of concern among traders in the California market that due to a current abundance of both storage gas and Pacific Northwest hydropower supplies this year, PG&E and SoCalGas will be issuing a lot more OFOs than usual this spring and summer.
With 45 companies reporting to it (two less than two weeks earlier), Minerals Management Service said (MMS) Gulf of Mexico shut-ins caused by last year’s Hurricanes Katrina and Rita had shrunk to 1,392.77 MMcf/d Wednesday. That represented a minuscule reduction of 9.67 MMcf/d from its tally on March 9. Deferred Gulf production since Aug. 26, 2005 now totals 692.299 Bcf, equivalent to 18.967% of about 3.65 Tcf in normal annual output. Eighty-seven platforms remain evacuated, MMS said.
Jim Osten of Global Insight looks for storage withdrawals to be reported at 45 Bcf for the week ending March 17 and 82 Bcf for the week ending March 24.
Reuters news service said its survey of 22 industry players yielded an average expectation of 31 Bcf pull in the report coming out Thursday. Estimates ranged from a build of 8 Bcf to a draw of 75 Bcf, it said.
Bentek Energy said its storage sampling indicates a withdrawal of 32 Bcf last week. But demand data indicates that the withdrawal could be as low as 25 Bcf, Bentek added. It also noted that “like the first sign of spring in the East region sample, TCO [Columbia Gas]” had injected 3.4 Bcf. (The Producing region has reported an occasional net injection in recent weeks, but the East region has consistently led in the amount of withdrawals.)
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