With most of the remaining very cold weather staying confined to the Rockies, Upper Plains and western Midwest, a significant rally in prices did not seem to be in the cards. But numbers rose at all points Tuesday between about 15 cents and 30 cents, with a large majority of gains being in the 20s.
Several sources pointed to the strength of petroleum-related futures Monday and its uplifting effect on that day’s natural gas screen as having a residual impact on cash gas Tuesday. “Crude prices near $37/bbl may not be a record, but they certainly will catch energy traders’ attention as historically high,” noted one. (Gas futures scored another 1.5-cent rise Tuesday, while crude, heating oil and unleaded gasoline at New York Harbor saw modest retreats.)
With oil prices higher, there is little pressure from fuel switching on the gas market. One analyst pointed out that the higher oil prices in U.S. dollars are partly the result of the devaluing of the dollar, and don’t represent an increase to the rest of the world. For that reason, he believes they could stay at current levels for awhile.
There wasn’t much else besides the lofty energy futures levels at Nymex on which to pin the physical gas market’s upticks, leading one source to joke about the “stealth blizzard” that must be hiding offshore and about to pounce on much of North America. Only a few areas have much in the way of heating load currently, although a modest amount of warmth that could induce air conditioning use is starting to show up along the Gulf Coast strip from South Texas through Florida. And analysts repeatedly downplay the possibility of any near-term deliverability problems with storage levels being where they are.
Recalling last week when it was rare to have all regions moving in the same price direction or by similar amounts, a West Coast trader marveled, “I don’t think there was a single point that didn’t jump up at least 20 cents in the swing market. That kind of coast to coast uniformity in price movements is none too common.”
A Calgary-based producer said Alberta has had some snow recently “but nothing special.” Also, maintenance on the Grande Prairie Mainline (see Transportation Notes) means NOVA receipts are down a little bit. “It’s not that much, but every little bit could make a difference” in a generally stagnant market, he said. However, he had to conclude Monday’s advances in energy futures were the chief factor driving up cash gas across the board.
A Houston-based marketer noted that compared to weekend temperatures in the 60s, it has gotten colder in Chicago since then, but he didn’t see that as enough to rationalize 20 cents-plus price gains. He continued, “85-95 Bcf is my EIA guess,” which falls below the common 100-120 Bcf range of prior expectations. The marketer looks for “a big Nymex sell-off after the report comes out Thursday,” with cash to follow suit Friday.
“I was thinking that this country must have some real issues if prices can rise this much amid such mild weather,” commented a Midwestern marketer. A low of 30 degrees was forecast for the Detroit area Wednesday, but the marketer said his house elsewhere in Michigan was getting so warm that he has been leaving a window open at night lately.
The Rockies, where much of the lingering chill resides, saw most of Tuesday’s larger increases of a quarter or more. However, Kern River was reporting normal linepack levels again. They had been on the high side last week, according to the pipeline’s bulletin board.
Lehman Brothers analyst Thomas Driscoll expects a storage withdrawal of 100 Bcf for the week ended Feb. 27, which would compare with a year-ago pull of 176 Bcf.
The National Weather Service sees almost nothing in the way of below normal temperatures for the March 8-12 workweek, saying Tuesday they will occur only in extreme South Texas and in Florida along with the southern sections of Alabama and Georgia. It predicted above normal readings everywhere west of a line running from the western tip of Texas through southern Wisconsin.
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