It was growing clear that despite some recent moderating weather trends, winter may have loosened its grasp a bit over the northern half of the U.S. and Canada but certainly hasn’t let go yet. Thus a moderate rally in cash prices continued Wednesday.
Mild backsliding at Dominion and Transco Zone 6’s non-New York City pool constituted minor exceptions to overall gains that ranged from a little under a nickel to nearly a quarter. Most points were up about a dime or less.
Another winter storm is descending on much of the Midwest, according to The Weather Channel, and after a day of relative calm Thursday the Northeast also will get a fresh taste of bad weather. Most of winter’s wrath in the West is concentrated in the mountainous areas, while the southernmost tier of states can count on cool but not unpleasant temperatures for a while longer. But traders are keeping in mind the National Weather Service’s prediction that nearly all of the Lower 48 will be experiencing below normal temperatures next week (see Daily GPI, Feb. 4).
Any ancillary support that gas prices may have derived from Monday’s spike of nearly $2/bbl in crude oil futures continued to fade. The March crude contract plunged nearly another dollar Wednesday, leaving it not far above $33/bbl, and heating oil and unleaded gasoline (New York Harbor) also recorded major losses after a government report indicated sizeable increases in stockpiles. The natural gas screen wavered on either side of flat before ending the day up less than a penny.
The pending cancellation of a lengthy OFO-like restriction by Northern Natural Gas (see Transportation Notes) was a sign that gas load was easing a little, particularly in Minnesota and the Dakotas, said one Midwestern utility buyer. But regional prices were still stronger Wednesday. He noted that his city was expecting its third snowstorm in about 10 days starting Wednesday night or early Thursday.
A marketer said the Northeast is remaining cold, although current conditions still seem downright balmy in comparison with the previous month or so. He sees mild price strength continuing through Thursday, “at least until the storage report comes out, then we’ll take our market cues from there.”
A Midcontinent marketer reflected general consensus in calling for the Energy Information Administration to report withdrawal of 210-215 Bcf Thursday morning. “A big number this week, to be sure,” he went on. “If we end the withdrawal season with anything less than 1 Tcf in the ground, traders are going to start getting really antsy. I would be thrilled to see 1.2 or 1.4 Tcf in storage to begin the injection season. That would put downward pressure on summer prices.”
El Paso kept an OFO-like restriction in place through at least Wednesday. It appeared to have the most price-boosting effect on Waha/Permian Basin numbers, which saw some of Wednesday’s largest upticks of 20 cents or more. But any impact was subdued in the San Juan Basin and California markets, which advances only about a dime or less.
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