Losses of 30 cents or more at a couple of Northeast citygates topped overall softness in pricing Friday. Colder weather trends in some areas obviously didn’t perk up demand enough to overcome mild conditions in much of the East, the residual drag of Thursday’s 12-cent screen drop and the typical slump in industrial load over a weekend.
There were a few scattered flat points, but generally the market saw mostly double-digit declines ranging from about a nickel to a little more than 35 cents. The West with its semi-monopoly on cold weather held up most strongly, garnering the lion’s share of dips of less than a dime.
Blasts of winter were attacking the West from both the Pacific Ocean and Western Canada, The Weather Channel said. That meant temperatures 5-30 degrees below average for the entire region by Sunday, with Denver seeing daytime highs in the teens, it added. The South would have a moderate weekend but start feeling the effects of a cold front by Monday. TWC expected some division in the Midwest, with cold conditions in the western parts balanced by more moderate weather toward the east.
However, “Everything we’re seeing is pretty benign,” commented a Northeast marketer. Although national services like The Weather Channel may see cold fronts in the region early this week, all the local forecasters say there won’t be very much cold through the end of the month, he said.
Both the marketer and a Gulf Coast producer remarked on a late burst of strength at Henry Hub. It was kind of weird, according to the marketer; the Hub got down to around $4.00 in the early half of Friday’s session, “then took a 30-cent jump near the end for no apparent reason. It was even more odd because of the pipes saying they can’t handle excess imbalances over the weekend.”
The producer chimed in: “This is a warm weekend, so I’m not even sure why it [Hub] rallied. It wasn’t the [futures] contract, which was not moving. All the volatility was in cash. Maybe it was storage-related. A trader could have been waiting to make up some gas on a storage play from earlier on.”
A Florida utility buyer with no swing prices to report said Florida Gas Transmission’s cautionary note of a potential Underage Alert Day notice was a good clue that there’s virtually no cooling or heating load to be found in the state.
“We’re not all that cold at this point, but temperatures should drop quite a bit this weekend,” said a marketer in the central Plains region.
From the day after Thanksgiving through the first of December, the National Weather Service sees a divided nation. That is, it looks for temperatures to be above normal in the East and below normal in the West, with a strip of normal conditions dividing them. The relative warmth in the East will cover a slightly larger area — everything east of a line from the Minnesota-Wisconsin border through West Texas — than the western chill.
Citigroup analyst Kyle Cooper said his initial estimation for this week’s storage report is “a small draw, probably in the single-digit range.” The upcoming report will compare with withdrawals of 49 Bcf a year ago and 40 Bcf in the five-year average. He also noted that past “inventory changes for the third week in November vary from a build of 30 Bcf in 2001 to a draw of 148 Bcf in 2000.”
A Midcontinent marketer found “bidweek kind of slow today. I think a lot of things for December will really get hopping Monday.” Northern Natural-Ventura was trading at index plus a nickel, while the pipeline’s demarcation point was at index flat, he said. He explained the relative Ventura strength as due to Alberta being “so cold lately, so it’s keeping more gas at home for itself” and thus limiting volumes available for Northern Border delivery at Ventura.
December basis was plus 83-84 cents Friday for both Texas Eastern M-3 and Transco Zone 6 NYC, which was off almost a full dime from early in the week, one trader reported. Bidweek numbers were approximately the same Friday as they had been Thursday, he said.
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