Cash gas prices on average jumped 63 cents Thursday as forecasts of chilling cold rattled through the markets and lifted New England and Eastern points to multi-dollar gains. Without the stout gains on the Eastern Seaboard, the overall market gain shrinks to just 3 cents.
A handful of points in the Midwest and Midcontinent posted small losses. The Energy Information Administration (EIA) reported that natural gas inventories for the week ended Jan. 25 fell by 194 Bcf, the largest withdrawal of the season but below trader expectations. Futures managed to recover from early report-related weakness, and at the close March had gained 0.4 cent to $3.339 and April had added 0.7 cent to $3.392. March crude oil fell 45 cents to $97.49/bbl.
Northeast prices soared as forecasts called for another blast of arctic air sweeping from the northern Plains to the mid-Atlantic and New England as the week progresses. “The cold wave will follow a brief warmup that will lead to severe weather in some locations,” AccuWeather.com meteorologists said.
“A second pulse of stratospheric warming occurred during the middle of January is now sending another blast of arctic air southward. Sudden warming in the stratosphere is often a sign that arctic air will build and drive southward into the mid-latitudes two to three weeks later,” said meteorologist Mark Paquette. “The new wave of arctic air will be almost as cold as the first blast that hit during the latter part of week three and the first part of week four of January.”
A Northeast marketer said he thought the cold weather would last through Wednesday or Thursday of next week. “We’ll keep seeing the volatility as long as people keep driving the price up for whatever reason. It may drop for the weekend but kick back up through the week.”
AccuWeather.com forecast the high temperature Thursday in Boston of 60 would sink to 35 Friday. Highs next week are expected to remain in the low 30s, below the seasonal norm of 36. In New York Thursday’s mild 55 high was anticipated to fall to 34 on Friday with next week’s highs ranging from the low 30s to low 40s. Chicago’s Thursday high of 18 was predicted to drop to 11 Friday, but next week’s highs were expected to be in the mid to upper 30s. The normal high in Chicago at this time of year is 32.
Surging power prices provided much of the impetus for the day’s stout natural gas gains. Peak power for delivery Friday at the New England Power Pool’s Massachusetts Hub jumped $101.79 to $160.56/MWh, and at the PJM Western Hub next-day peak power rose $11.04 to $46.97/MWh. In central New York state peak power into the New York Independent System Operator Zone G delivery area jumped $38.88 to $85.63/MWh.
Deliveries Friday to the Algonquin Citygates vaulted $14.21 to $21.63, and gas on Tennessee Zone 6 200 L jumped $13.99 to $21.30. Deliveries into Iroquois Waddington added $10.21 to $14.75.
Gains in the Mid-Atlantic were more subdued. Friday deliveries on Dominion rose 5 cents to $3.33, and gas on Tetco M-3 advanced $1.22 to $4.77. Gas bound for New York City on Transco Zone 6 traded up $9.99 to $13.98.
Gulf and Texas points were up about 3 cents. Deliveries Friday on ANR SE gained 3 cents to $3.29, and gas into Columbia Gulf mainline rose 4 cents to $3.29. Parcels to the Henry Hub rose by 9 cents to $3.33.
Gas on El Paso Permian for Friday delivery was higher by 4 cents to $3.26, and at the Houston Ship Channel Friday volumes were quoted 3 cents higher as well to $3.22. On NGPL S TX next-day deliveries were up 3 cents to $3.25.
Prior to the release of storage data by the EIA, traders’ expectations were for a bullish report that would show a much greater withdrawal than historical averages. Last year, 149 Bcf was withdrawn at this time, and the five-year average stands at 178 Bcf.
Jim Ritterbusch of Ritterbusch and Associates forecast a pull of 207 Bcf but said that figure may have already been factored into Wednesday’s nearly 8-cent gain in March futures. He contended that a withdrawal of 210 Bcf would be required to move the market still higher.
A Reuters survey of 26 traders and analysts revealed a sample average of 206 Bcf with a wide range of 194-228 Bcf. Bentek Energy saw a decline of 202 Bcf.
The actual figure of 194 Bcf was at first a major disappointment to the bulls. March put in its low for the day at $3.243 shortly after the number came out but managed to climb back from a 9.2 cent deficit to settle fractionally higher on the day.
“$3.25 is now big-time support,” said a New York floor trader at the close. “We rallied about 9 cents off the lows, and the market is about unchanged from Wednesday, but considering the move downward, that’s a good, positive reaction.”
It seems as if traders have nothing to talk about except the weather. “We’ve never seen traders hanging on meteorologists’ every word as we have this season. We’re not so sure it’s helped very much,” said Energy Metro Desk Editor John Sodergreen.
For the moment, near-term forecasts are little changed. “We held the general forecast themes consistent today [Thursday] with a warm-prevailing pattern for the six-15 day following this very short-lived Arctic outbreak,” said Matt Rogers, president of Commodity Weather Group. “The European and American ensembles are generally in good agreement through the six-10 day, although there are detail differences in the Northeast involving storm tracking and temperature impacts.”
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