Drawing support from a bit of post-winter chill lingering across the northern tier of states and moderate increases in air conditioning in parts of the southern tier, cash prices recorded mild advances at the great majority of points Wednesday.
Although a few Northeast citygates rose a dime or slightly more, nearly all other points saw single-digit gains. There were some instances of flat pricing, particularly in California and the Rockies, and a couple of small declines at Northwest-related points (domestic and Stanfield). The pipeline continued to caution shippers that Pacific Northwest temperatures are warming and they should avoid banking gas on its system.
“We’re getting normal weather here, so it’s hard to understand why prices rallied,” said a utility buyer in the lower Northeast. However, he did acknowledge that temperatures along the northern East Coast over the next few days were looking colder than in his area, which may have explained why Northeast deliveries saw most of Wednesday’s larger upticks. The spike in May crude oil futures (up more than a dollar to $36.15/bbl following a government report of sharp declines in crude and related product stocks), which lifted the natural gas screen out of the red to a daily gain of 6.3 cents, came too late to affect Wednesday’s cash numbers, he pointed out.
The utility buyer said his company sold gas in both Transco Zone 6 pools and on Dominion, using its transport to buy at other points and replace the supply. “Trade around your assets, that’s our business model,” he said. He reported not detecting all that much storage injection demand currently, but wouldn’t be surprised if it’s happening.
A trader said he couldn’t help but wonder if the recent deterioration of the situation in Iraq was creating any psychologically bullish jitters in the energy markets.
With no new numbers to report, a Midwestern utility buyer said it was “quite a ho-hum market for us, which is appropriate for early April.” Noting a high around 70 degrees in his city Wednesday, he professed to have no idea about why prices rebounded slightly.
A marketer in the Upper Midwest also saw the rally as counterintuitive, saying the local high was up to 60 degrees Wednesday. “We had an earlier forecast of snow Sunday, but that’s been revised [to no snow], thank goodness,” she said.
Production-area points on Florida Gas Transmission registered some of the larger non-Northeast increases of nearly a dime as the pipeline declared an Overage Alert Day notice (see Transportation Notes), saying market-area linepack was low while demand there was growing. Besides Florida, temperatures were getting hot enough to get air conditioning turned on in South Texas and the desert Southwest. Meanwhile, lows were expected to remain in the 30s in parts of the Northeast and Midwest through at least Thursday.
Wednesday’s energy futures strength may lend some residual support to prices Thursday, but that is considered unlikely to offset the negative influences of trading for a long holiday weekend and generally mild weather forecasts throughout most markets.
The National Weather Service (NWS) forecast for the April 12-16 business week calls for below normal temperatures almost everywhere east and north of a line running from western Montana to southeast Texas. Normal readings in New England along with most of New York and New Jersey constitute the exception to eastern chill. The only area where NWS expects above normal temperatures is in the states of Washington and Oregon along with Northern California and the northwestern quadrant of Nevada.
One source, commenting on the NWS prediction, said it was hard to judge whether it was bearish or bullish for gas prices. After all, he went on, below normal in mid-April is quite different from below normal in either January or August. Also, the federal weather agency hasn’t had a very good batting average in its temperature forecasts since last summer, he said.
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