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Fading Weather Demand Forces All Points Lower
Spring is busting out all over — finally — and that translates to lower spot prices. Quotes fell across the board Thursday; a few drops were in single digits, but the rest were fairly consistent in all regions in ranging from a dime to just over 20 cents.
Although parts of the Northeast will experience just a bit more chill this weekend in the form of a weak cold front, it wasn’t expected to be serious enough to rally prices. Meanwhile, the weather elsewhere runs from no worse than cool in the Pacific Northwest and Upper Plains to moderately hot in parts of the desert Southwest; conditions in most places are generating very little, if any, of either heating or cooling load.
A marketer, noting highs in the mid 60s in the Upper Midwest, joked, “You’d think it was spring or something.”
The Energy Information Administration came in near the higher end of prior expectations with its estimate of a 65 Bcf storage withdrawal for the week ending March 19. Though the report seemed modestly bearish, Nymex traders greeted it essentially with yawns (see related story). Natural gas futures for April fell 9.3 cents, but their decline was dwarfed by major losses in the petroleum-based contracts. Crude oil for May fell a cool buck and a half to $35.51/bbl as doubts linger that OPEC will cut production as planned on April 1.
A trader at intrastate Texas points said he was “seeing kind of the same thing every day lately,” except that Thursday’s numbers were softer. The Katy market consists mainly of storage buyers these days, he added, because there certainly isn’t that much utility load to satisfy.
The Rockies tended to record most of the smaller declines of less than a dime after PG&E failed to extend a high-linepack OFO through Friday. The Southern California border into PG&E saw the day’s smallest loss of a nickel, while other California points had declines in the low teens.
One Northeast utility obviously was in a wheeling and dealing mood, reporting well over twice its normal number of daily transactions. About two-thirds of them were sales; a mix of sales and purchases was quoted for the production area, while all but one market area deal were sales.
As bidweek officially got under way, a marketer reported these fixed-price numbers Thursday: El Paso-Permian mid to upper $4.60s; Waha either side of $4.80; Panhandle Eastern mid $4.90s; ANR Southwest mid to high $4.90s; NGPL Midcontinent high $4.80s; and San Juan-Blanco mid $4.40s. She also had daily swing quotes that were anywhere from a few cents to more than a dime lower than April levels for Panhandle, NGPL, El Paso-Permian and Waha. That rendered moot another trader’s commentary on Wednesday about prices holding up despite fundamental weakness, in which he questioned why anyone would have bought spot gas for storage injection purposes that day when April prices were shaping up as lower than then-current swing levels (see Daily GPI, March 25). Thursday’s spot market declines apparently turned the situation around, at least at the Midcontinent and western points quoted above by the marketer.
One trader said he was seeing Katy deals for April at index minus 2.5-2 cents Wednesday. On Thursday someone was offering index minus 1.75 cents, he said, but no sellers were able to take advantage of the higher. “They can’t trade with that company because it shows up red on their ICE [IntercontinentalExchange] screens,” he explained.
“We’re just getting started on bidweek,” said a Gulf Coast producer. “We had a few deals done before the official start and set our positions, so we are ready to trade. The action [Thursday] was fair. Not hectic, not dead. The trend I have seen lately is to do just a bit of trading every day so that there is no ‘big’ trading day.”
Switching from winter to summer is quite a change, the producer continued. “April could be cooler than average, but not as cold as March. If that takes away from [storage] injections, April may be the cheapest of the ‘summer’ months.”
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