Despite frigid weather remaining in several areas Friday, some isolated warming trends helped push cash prices lower at most points Thursday. The small decline by expiring February futures a day earlier and the fact that a weekend day was involved in Thursday’s deals were other bearish influences.
Because of the transition between months occurring Sunday, Thursday’s trading was for Friday-Saturday flows. Deals done Friday will cover the Sunday-Monday period.
Northeast citygates, which had been plunging for the previous days in the face of overall market strength, were joined by only three other points in ranging from flat to about 35 cents higher. Otherwise the market recorded losses of a couple of pennies to about 35 cents, with most of the largest ones occurring in the Gulf Coast, Midcontinent/Midwest and Southwest supply basins.
For a change the Energy Information Administration came in above consensus expectations in the mid to upper 170s Bcf when it reported a storage pull of 186 Bcf for the week ending Jan. 23. In a bullish response Nymex traders sent March futures 15.6 cents higher in their prompt-month debut (see related story).
One source also suggested that massive power outages in the central U.S. translated into a significant reduction of demand for gas-fired peaking generation. ABC News said utility officials were estimating that about 1.3 million residents and business from Arkansas to Ohio were without power Thursday and it could be mid-February before electric service is restored to some of them.
TGT and Southern Star Central, both headquartered in Owensboro, KY, were working with skeleton crews for a second day Thursday as their offices remained closed due to the severe winter storm that recently departed the midsection of the U.S. (see Transportation Notes).
For a change there were no new announcements Thursday of additions to or subtractions from cold weather-related pipeline restrictions. A small gain by Southern Natural Gas was the sole exception to softness at all other Gulf Coast points. Southern had already posted a notice Wednesday afternoon of an OFO Type 6 that would go into Friday. Florida Gas Transmission’s (FGT) warning to market-area customers of the potential for an Overage Alert Day being declared due to forecasts of cold weather in Florida by Friday night failed to avert a minuscule drop at FGT Zone 3, but did boost the Florida citygate by nearly 35 cents.
Prices into El Paso were among Thursday’s weakest despite the pipeline saying it had set the probability of declaring a Strained Operating Condition or Critical Operating Condition to high because of low linepack. Its system was being drafted due to a combination of takes in excess of scheduled deliveries and underperformance in the supply basins, El Paso said.
The low-linepack situation on El Paso seemed to defy a lack of significant heating load in two of its major market areas: the Phoenix vicinity and Southern California, where highs in the 70s were expected in both cases Friday. The Friday forecast for Northern California was merely chilly, while a warming trend would be under way in the Rockies, with Denver’s expected high in the upper 50s Friday unseasonably mild. The Pacific Northwest — cold but not freezing — was due to see little change in temperatures, while Alberta would see lows go below freezing again Friday. NOVA Inventory Transfer quotes were flat.
Forecasts were mixed for two regions. The Oklahoma/Texas end of the South will be warming from Friday through the weekend before a fresh bout of cold weather arrives Monday. Temperatures will largely be static from Thursday’s readings in Louisiana and Arkansas, while southern states east of the Mississippi River will see falling temperatures as a cold front moves southward and eastward, The Weather Channel said.
The Midwest also will have temperatures moving in two directions: higher in most western sections and lower in the eastern half of the region. Chicago’s high in the mid 20s Thursday should be sliding into the upper teens Friday, according to Madison, WI-based Weather Central, while the 10-degree low in Omaha, NE, Thursday should rise to about 23 Friday.
A Northeast marketer said citygates rallied moderately because even though the harrowing winter storm that occupied the region Wednesday had moved out to sea, the temperatures it left behind were even colder than before. Despite forecasts for a new winter storm in the Northeast early next week, he said he thinks softer pricing will dominate the first week of February, citing forecasts for seasonal to a little above-normal temperatures.
There was still some February baseload trading still going on Thursday, but it was negligible, the marketer said. Nearly everyone finishes bidweek business on the expiration day of the prompt-month futures contract, he said. Other than big price drops, he considered bidweek trading fairly routine.
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