It appeared that many North American residents were destined to experience a “White Christmas,” but likely many wouldn’t be very happy about it as blizzard-like conditions were expected to cause major transportation snarls. Despite the usual softness associated with an extended holiday weekend, prices were up strongly at virtually all points Thursday due to projections of widespread harsh winter weather.
The previous day’s advance of 10.6 cents by January futures also contributed to cash market bullishness.
Gains ranged from about 15 cents to a little more than a quarter and were spread fairly evenly among geographic markets.
Prior-day futures guidance will change from positive to negative for the cash market Monday after the prompt-month Nymex contract retreated by 17.8 cents (see related story).
For a change the Energy Information Administration failed to meet consensus expectations in the mid 170s Bcf when it reported a 166 Bcf storage withdrawal during the week ending Dec. 18. Tim Evans of Citi Futures Perspective commented that the below-estimates pull possibly implied a stronger supply response to recent cold, but it was still supportive compared with the five-year average pull of 129 Bcf, “and we do still see above-average storage withdrawals for the week ahead, so the overall background fundamentals still look supportive.”
After a bit of midweek respite from the cold, the South was about to join most of the rest of the U.S. in experiencing lows in the 30s, while bottom-end temperatures in the 20s, teens or single digits could be expected on Christmas could be expected from New England through the Midwest and Upper Plains into the Rockies and Western Canada.
There was no surprise in the market being somewhat illiquid Thursday, with many traders having already departed or beginning holiday-related vacation periods. IntercontinentalExchange volumes at Henry Hub declined from 564,000 MMBtu Wednesday to 352,300 MMBtu Thursday.
In an “imagine if” type of forecast Thursday, Tudor Pickering Holt analysts mused, “What if we start Jan 1…with two more good gas storage data points (this Thursday, next Thursday) and positive EIA-914 (Dec. 31) under our belt? Not an impossibility, so worth pondering. Answer: gas will be at $6.50/Mcf and energy stocks will rip to start year.”
In the holiday-shortened week ending Dec.23, the Baker Hughes Rotary Rig Count saw a major reduction of 22 rigs to 751 actively seeking natural gas in the U.S. One rig was added in the Gulf of Mexico, Baker Hughes said, but 23 were deactivated onshore. Its latest tally was flat from a month ago but 44% less than the year-earlier level.
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