Although the overall weather picture remains basically moderate, there apparently is just enough chill returning to cause cash prices to level off or rally Wednesday. A majority of points were flat to slightly higher, with gains of more than about a nickel largely limited to the Rockies/Pacific Northwest. California and some Northeast citygates saw small declines.
“There’s a little bit of weather coming in,” said a producer noting that it is cooling off again in East. Still, he was surprised at the firmness of Wednesday’s prices because the upcoming temperature changes didn’t seem big enough to support a rally, albeit a generally small one.
“I was expecting more lower prices” with oil futures continuing to weaken, he continued. But the natural gas screen’s refusal to follow oil prices lower Tuesday, which was repeated Wednesday, may have provided a modicum of support for cash gas, he said.
One source rejected the idea that the upticks may have been due in part to speculation of a smaller than expected injection in Thursday’s storage report. However, Citigroup analyst Kyle Cooper said he “would expect a price rally if the report is below even 20 Bcf,” which is the lower end of Cooper’s estimation of a 20-30 Bcf build.
Cold fronts were predicted for Thursday in both the Northeast and Great Lakes regions, but their salient features were the accompanying stormy weather than any big drops in mercury levels. The South continues to experience a modicum of cooling load, but only the Gulf Coast strip of states was seeing highs above 80 degrees Wednesday.
The West had some contrasting influences. Lows in the 30s ranged from the lower Rockies to the Canadian border and over into the Upper Plains, while Phoenix was expected to hit a high near 90 degrees. But high linepack levels prompted PG&E to declare an OFO for Thursday (see Transportation Notes), which helped explain why California sat out of the general western gains. Kern River managed to rise nearly a dime despite still reporting high linepack in all segments, and Sumas was up just over a dime even with Westcoast maintaining a longstanding imbalance tolerance range of zero pack and 20% draft.
Northwest said nominated Sumas volumes had risen to more than 1 Bcf/d this week, which might cause it to act to cut back there to avoid operational problems (see Transportation Notes).
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