Virtually all points fell Thursday as they succumbed to a triple whammy of bearish threats: further increases in storage inventories, futures weakness and mild weather for mid-winter that refuses to go away and allow normal cold conditions to take hold.
A large majority of losses were in double digits as they ranged from about a nickel to about 30 cents (thin trading caused Algonquin receipts to see the aberration of a plunge around $2.85). Flat quotes for Transco Zone 6-New York constituted the only exception to softness.
The Western Canada market was so weak that Empress had several quotes below C$2 and averaged right around the C$2 level.
The cash market just can’t seem to get any relief from the Energy Information Administration. The government agency’s report of an 87 Bcf storage pull during the week ending Jan. 13 was only slightly below consensus estimates centered around 90 Bcf, but it fell far short in historical comparisons with year-earlier and five-year average volumes. February futures took their second major beating in three days as Nymex traders pushed the contract 15.0 cents lower (see related story).
The National Weather Service (NWS) has more bad news for gas market bulls next week. It sees only Washington state along with small portions of Idaho, Montana and Oregon as having normal temperatures during the Jan. 24-28 period; the rest of the Lower 48 is forecast to have above-normal readings. NWS said above-normal conditions will be especially pronounced in the densely populated Midwest and Northeast regions.
Although it had not yet ended a systemwide low-linepack OFO, Westcoast reported Thursday that linepack was beginning to return to desirable levels. As a result, Westcoast Station 2 recorded Western Canada’s biggest fall after having been relatively firm earlier in the week.
Lows nearly 25 below zero are predicted from Alberta through Manitoba Friday. Less frigid but still subfreezing lows in the U.S. are expected to be mostly along the northern border and in parts of the Rockies, Midwest/Midcontinent and Northeast. That may seem like a pretty large amount of heating load, but combined with generally cool to mild temperatures along the southern third of the U.S., it was unable to prevent Thursday’s softening.
A Texas-based marketer said there was little chance of much price strength showing up before the end of January, especially in Friday’s trading for the weekend. It’s been hard to keep up with the pipeline restrictions in the last couple of weeks, he observed, because they seem to have been coming and going a lot since the new year began. Tennessee was a prime example Thursday (see Transportation Notes).
A western utility buyer also perceived low odds for higher prices. It’s just cool in his company’s service territory now and should be getting even warmer next week, he said, adding that has resulted in low gas throughput currently.
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