In spite of forecasts of frigid New Year’s Eve weather from the Northeast through the Midwest and into the Upper Plains, with even the South due to experience some sub-freezing lows, prices dropped at a large majority of points Tuesday. The overall softness even defied significant prior-day screen support from Monday’s 31-cent spike by expiring January futures.
The Northeast, along with Dominion in Appalachia, constituted the last holdout of firming numbers. Regional gains of nearly a dime to about $1.05 were the result of a quick-hitting snowstorm expected to arrive Wednesday from the Midwest, according to The Weather Channel (TWC). Snowfalls of as much as six to eight inches are possible from southeastern New York state across southern New England, the forecaster said, and wind chills by midnight will likely be a bit below zero in Boston and in the single digits in New York City.
However, most of the cash market ranged from flat to about 35 cents lower. The largest losses tended to be concentrated in Texas, California and the Southwest supply basins. Overnight chills are giving way to fairly moderate midday weather in much of Texas, and El Paso lifted a low-linepack Strained Operating Condition Tuesday, saying linepack had returned to normal and underperformances at San Juan Basin receipt points had subsided (see Transportation Notes).
Although supply shortfall issues had ended for El Paso, they were cropping up to some degree in the Rockies. Kern River was reporting low linepack Tuesday in the two farthest downstream segments of the four on its system.
Pipelines serving the Northeast were bracing for heavy demand Wednesday. Dominion issued two OFOs for several New York utility meters (see Transportation Notes); affiliates Texas Eastern, Algonquin and Maritimes & Northeast are barring creation of due-pipeline imbalances and payback of due-shipper imbalances; and Transco noted forecasts of a return of colder weather to its market area this week in urging shippers to stay in balance or risk pipeline restrictions.
Pipeline precautions stretched as far south as Florida, where Florida Gas Transmission — although it did not issue one Tuesday — warned shippers of a potential Overage Alert Day because of mid 30s temperatures predicted in northern Florida over the next couple of days.
Lows in the teens and 20s will be prevalent in the Northeast and Midwest Wednesday. The Rockies will actually be almost as mild as much of the South, with Denver’s low expected to stay just above freezing.
A Texas-based marketer said he thinks softness will prevail again in most if not all markets Wednesday. Although heating load will still be fairly plentiful on New Year’s Day, he said, the trading for Wednesday’s flow days will include a holiday and February futures fell 22.5 cents Tuesday.
The marketer said very little bidweek trading was still going on Tuesday as people were mostly concerned with end-of-year daily deals. On Monday the Chicago citygate for January was in the high $6.10s, with basis of plus 5-6 cents. That represented a sharp basis drop from a pre-Christmas range of plus 30-40 cents because of January futures strengthening greatly since then, he said. He reported no trouble selling January gas, saying demand was adequate.
Stephen Smith of Stephen Smith Energy Associates said he is projecting a storage withdrawal of 156 Bcf to be reported for the week ending Dec. 26. Citi Futures Perspective analyst Tim Evans is looking for a larger pull of 170 Bcf, and said he expects draws of 95 Bcf and 150 Bcf for the weeks ending Jan. 2 and Jan. 9, respectively. Based on these projections in comparison with significantly smaller five-year average volumes, Evans said the year-on-five-year average surplus of Dec. 19 could swing to a 50 Bcf deficit as of Jan. 9, “even as the more intense cold is just arriving.”
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