Just as some moderation of cold weather was able to turn the cash market weaker in the latter half of last week, the return of lower temperatures spurred price rallies across the board Monday. All upticks were in double digits except one, and that was the Algonquin citygate’s dollar-plus spike.
Monday’s gains ranged from about 15 cents to nearly $1.20. Those in the West and Midcontinent/Midwest tended to be a bit more on the smaller side, but otherwise increases were pretty well mixed by geographic region.
Stormy and cold is the name of the weather game for Tuesday in the Northeast and much of the West. The West will tend to have most of its snow in upper-elevation areas, but the lake-effect snows of the Northeast will be plentiful also in the flatlands of northern New England, northern New York and most of Pennsylvania, according to The Weather Channel.
The fresh blast of cold will be somewhat fleeting in the Midwest, as a slow moderation is expected to begin later this week. The South will feel seasonal to below normal temperatures, with highs in the 40s and 50s for the most part.
Low-linepack issues were surfacing again on a few western pipes such as Kern River. However, the sole OFO-like constraint in the East is being lifted Tuesday morning by MRT (see Transportation Notes), leaving Northwest’s Stage III Unauthorized Overrun Entitlement as the only remaining condition similar to an OFO.
For a producer who trades the Northeast, it is “not a case of getting real cold again” in his market area; rather, “it just never warmed up all that much” and is returning to conditions like those around the middle of last week. Asked whether he expects prices to keep rising Tuesday, he replied, “Absolutely. This thing [cash market] is going to follow the screen until something in the weather comes along to break up” the screen-cash link. That is, he explained, a very cold or very warm spell might send physical quotes higher or lower no matter which way the screen goes. The producer said pipeline transport is wide open and supplies are readily available, but he can tell that some points “are just not as liquid in trading as in years past.”
A Midwest marketer reported a “pretty quiet trading day,” which was good in helping relieve holiday-related stress levels. Unlike the producer, the marketer wasn’t so sure of further price firmness Tuesday. She conceded there was a fair chance of prices continuing to rise because of Monday’s screen support and colder temperatures having returned to the Midwest market area, but said new gains were not assured because another warm-up is due later this week. She was not sure if the warmer temperatures would arrive soon enough to affect loads for Wednesday flow, but said they might. Also, Monday’s price rebounds might induce some extra storage use by utilities and/or end-users.
The count of hurricane-related Gulf of Mexico shut-ins is poised to sink below the 2 Bcf/d level this week for the first time since Katrina caused more than 8 Bcf/d in offshore production outages. Minerals Management Service said 49 companies reported 2,014.34 MMcf/d as still offline Monday. That represented a drop of 213.40 MMcf/d from the previous Thursday. The next report will be issued Thursday at 2:30 p.m. EST. Although a lot of the remaining shut-in gas is merely awaiting pipeline repairs, the restart of processing plants or other third-party actions before resuming flow, some industry observers are starting to perceive that a substantial amount will never be restored because of prohibitive costs of repairing infrastructure for old, nearly depleted fields.
Citigroup analyst Kyle Cooper said his initial estimation of the storage report for the week ending Dec. 16 calls for a withdrawal in the 150-160 Bcf range.
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