With the post-weekend burst of cold in much of the East expected to begin fading Wednesday in some sections and relatively moderate conditions expected during the Thanksgiving holiday weekend, prices fell at all points Tuesday. The 40.8-cent expiration-day spike by December futures a day earlier proved unable to sustain the post-weekend rally in most of the cash market.
The Northeast, where all of Monday’s minority declines had occurred, recorded most of Tuesday’s biggest drops. Overall the losses ranged from a couple of pennies to about 80 cents.
Trading Tuesday was done for flows through Sunday due to the month-to-month transition falling on Monday. Sources said the extra-long five-day period beginning on a holiday had a lot to do with Monday’s screen strength failing to keep cash prices moving higher.
Deals done Wednesday will be for Monday-only flow. They will have negative prior-day futures guidance after January began its prompt-month contract reign with a plunge of 44.1 cents (see related story).
Low temperatures in the South that had reached freezing or even less Tuesday are expected to move quite a bit higher. For instance, Atlanta’s forecasted low of 29 Tuesday is predicted to hit 40 or so Wednesday. Conditions are even milder at the region’s other end; the Houston high is projected to reach the mid 70s Wednesday.
Southern Natural Gas said the forecast indicates that temperatures in its service area will be warming from Thursday through Sunday, so it asked shippers to stay in balance to reduce chances of an OFO Type 6 being implemented.
Bottom-end temperatures in the 20s and low 30s will continue Wednesday at many locations in the Midwest, lower Northeast and parts of New England. However, that will be offset to some extent by daytime highs in the mid 40s at many locations in those areas.
Much of the West will range from merely chilly to mildly warm, with most of the really cold weather limited to mountain areas and either side of the Canadian border.
A Texas-based marketer considered the five-day holiday weekend covered by Wednesday’s deals as the chief contributor to a falling spot market, but he noted that it also is not terribly cold in the market areas yet. He said he expects prices to keep going down some more Wednesday due to Tuesday’s screen drop, but thinks they’ll get a little bounce Monday as a new siege of cold weather is expected in much of the U.S. in the first week of December.
December baseload prices were trending mostly upward as bidweek proceeded, the marketer continued. Anything being traded Tuesday for December was probably down due to the futures weakness, but little volume would be represented, he said, since almost all remaining bidweek deals were being completed Monday soon after the futures expiry. He said his call for the Chicago citygate index is $6.79, which would be up from $6.22 in November.
A Midwest utility buyer said her company was “a little surprised” that spot prices fell after Monday’s screen spike and freezing lows still being in the regional forecast for Wednesday. But after all, she added, spot prices got quite high on Monday, so Tuesday may have represented a “correction.” Like the marketer, she also thought the extra-long holiday weekend had a lot to do with Tuesday’s softness.
The buyer reported getting plenty of supply offers for bidweek, although she bought only one Northern Natural-demarc baseload package at index flat. She said she was hearing a demarc index around $4.90, which would represent a big jump from November’s $3.25.
Stephen Smith of Stephen Smith Energy Associates is projecting a storage pull of 47 Bcf for the week ending Nov. 21, which he said was up from his original estimate of 42 Bcf. Citi Futures Perspective analyst Tim Evans had a similar outlook for the most recent week, saying he expected a 45 Bcf pull to be reported. He also estimated the withdrawal for the week ending Nov. 28 to be 65 Bcf, but then expects a big jump to 115 Bcf for the week ending Dec. 5.
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