Other than parts of the South, desert Southwest and California, it was rare to find any forecasts for Thursday lows that didn’t range from around freezing to a few degrees below zero. But that was able to keep only a little more than half of the cash market from seeing losses Wednesday. One source suggested that increasing use of storage in lieu of spot gas purchases may have been limiting the price-boosting impact of the cold weather.
A modest majority of locations were flat to about 40 cents higher, with the snowstorm-occupied Northeast recording most of the largest gains. Losses ranged from 2-3 cents. Although small drops were fairly prevalent in the Gulf Coast, it was the Southwest production basins where most of the largest losses occurred as some former low-linepack issues began to resolve themselves.
But one of the market’s anomalies involved the Southern California border being flat (in addition to the supply basin declines) even with SoCalGas and San Diego Gas & Electric saying they didn’t expect to be able deliver all nominated supplies to noncore customers in three counties (see Transportation Notes). Another was that even with an expected low around 10 Thursday, the Chicago citygate managed no more than a flat performance.
After a brief show of support for the cash market Tuesday, January futures returned to their losing ways Wednesday by falling 6.6 cents (see related story).
Transwestern continued to cite several instances of receipt point underperformance along its system Wednesday, but lifted a low-linepack Alert Day that had been in effect since Tuesday. And El Paso said its linepack had returned to normal Wednesday.
Southern said inventories have begun to shrink at its two storage fields in Louisiana and Mississippi. After rising from 58.3 Bcf (97% of total capacity) as of Nov. 17 to 58.5 Bcf (98%) as of Nov. 24, the volume in its latest report for Dec. 1 was down to 56.8 Bcf (95%). That compares with inventories of 55.4 Bcf (92%) on Dec. 2, 2010 and 57.0 Bcf (95%) on Dec. 3, 2009.
A Northeast utility buyer said the region’s winter storm was having relatively little impact in his service area Wednesday, but temperatures were getting colder after a relatively mild period.
He said the utility’s gas costs had shrunk considerably in the last couple of years primarily because the proximity of Marcellus Shale production greatly reduced transportation expenses. However, he said because of the utility’s positioning and the routing of delivery pipelines, it never got to take advantage of the super-low Marcellus-area prices into Line 300 in Tennessee’s Zone 4 (which occasionally fell as low as a dollar or less as recently as October) before they came up to about normal.
Citi Futures Perspective’s Tim Evans has weighed in with one of the largest estimates (22 Bcf) for the storage withdrawal expected to be reported Thursday for the week ending Dec. 2. Most other predictions are about half that or less. Evans looks for rapidly growing succeeding pulls of 87 Bcf, 132 Bcf and 124 Bcf for the weeks ending Dec. 9, Dec. 16 and Dec. 23, respectively.
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