Although the Northeast is due to continue seeing seasonally moderate weather Friday, there were enough gains in heating load in other areas to cause cash market gains across the board Thursday. The previous day’s 8.1-cent loss by May futures apparently was unable to impair the overall bullishness.
Increases ranged from a couple of pennies to a little more than a quarter. Most of the largest ones occurred in the Rockies, where the bulk of the coldest U.S. weather continues to take up residence, and the Midwest, where although some sections would be getting warmer Friday, others were due to see lower temperatures and nearly all of the region would be getting colder during the weekend.
Neither those expecting another small build nor those looking for a return to small draws in the storage report for the week ending March 27 saw their expectations fulfilled. Instead, the Energy Information Administration (EIA) said inventories were unchanged that week. However, a complicating factor was EIA saying 9 Bcf of working gas had been reclassified to base gas, which effectively canceled out what would have been a 9 Bcf injection, as Citi Futures Perspective analyst Tim Evans noted. Despite the seeming bearishness of that development, natural gas traders at Nymex took their cue from a soaring crude oil contract in sending gas futures 8.7 cents higher (see related story).
Southern Natural Gas, which had signaled to some extent the possibility of the 3 Bcf storage build that was reported for the week ending March 20 (see Daily GPI, March 18), had another such indicator Thursday. Saying it anticipated cooler market-area weather as the weekend progresses, the pipeline added that based on current supplies and anticipated demand, “we expect storage requirements to exceed our injection capability by approximately 75,000 Dth[/d] through the weekend.”
There might have been some cooling load in Florida helping to boost the Gulf Coast market. But an Overage Alert Day (OAD) declaration by Florida Gas Transmission (FGT) had relatively small impact in boosting FGT prices, even with a slightly more stringent imbalance tolerance than usual of 20% (the pipeline usually sets OAD tolerances at 25%). Florida Gas Zones 2 and 3 in the production area eked out increases of only about a dime each, while the Florida citygate was up about 20 cents.
Although spring officially began about two weeks ago, it continues to look a lot like winter in some areas. Fairly heavy snow, along with lows continuing to be predicted in the 20s and low 30s, is keeping the Rockies market well supported. Even receipts into Kern River, which was reporting high linepack systemwide Thursday, managed to rise a little more than 20 cents. On the other hand El Paso, which had said linepack was moderately high Wednesday, reported that its system had returned to normal Thursday. Permian and San Juan numbers into El Paso rose a dime or so each.
In spite of the Florida heat, the rest of the South westward to about the Mississippi was cooling off considerably, with Friday lows in the 40s likely to prompt the firing up of at least a few furnaces. However, Louisiana and Texas are expected to continue seeing pleasant peaking temperatures in the 70s.
The Midwest was something of a hodgepodge of temperature trends. Such locations as Des Moines, IA, and Omaha, NE to the west could expect significantly warmer conditions Friday, while Chicago readings would be static, and Detroit along with the Ohio cities of Cleveland and Cincinnati were due to make significant gains in heating load. However, one source indicated that freezing weather would be returning to much of the region soon.
A utility staffer in the Lower Midwest said her area would be getting as warm as the mid 50s Friday, but the milder weather trend would be short-lived. Temperatures will start turning colder again Saturday, she said, and the utility is forecast to be back to coping with sub-freezing lows by the start of next week.
A Midcontinent producer said it looks like the market is pretty much weather-driven for now. Cash was pretty strong in his region, he said, and spot basis is tightening. However, a warming trend in Oklahoma had a significant impact on intrastate OGT, which recorded Friday’s smallest gain. The producer said he expected Midcontinent spot prices to stay above first-of-month indexes for a while due to the six- to 10-day forecast.
Sure enough, all of the Midcontinent was trading at solid double-digit premiums to index as of Thursday. However, several scattered points were already below index on the second day of the month, led by the Houston Ship Channel deficit of about 35 cents.
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