In spite of frigid weather remaining in place throughout much of the U.S. and Canada and prior-day screen support having returned the day before, prices were in retreat at most Gulf Coast, Midwest and Northeast points Tuesday. However, the Midcontinent and West continued to advance in nearly all cases, which was hardly surprising considering Wednesday lows are expected to range from the 20s and 30s to single digits in those regions.
A slight majority of the market ranged from flat to about 30 cents higher, with several flat East Texas points joining the Midwest and West in avoiding declines. Drops were small in most instances but ran as high as about half a dollar in the Northeast.
To be sure, an ever-so-slight warming trend in the South helped account for the general Gulf Coast softness. And although the Northeast will remain dry and cold, it will see relatively little change in temperature levels, according to Madison, WI-based Weather Central.
One source suggested that market-area buyers may have turned more to storage withdrawals to meet their loads after Monday’s price strength at all points, particularly in light of triple-digit gains in the Northeast Monday.
The cash market will have negative futures guidance Wednesday after the February natural gas contract fell 15.7 cents amid overall weakness in Nymex’s energy complex.
However, the softness in parts of the East isn’t expected to last as the most severe cold so far in the current heating season is expected to be in place in much of the U.S. Thursday. That was already being manifested by forecasts of zero or sub-zero lows Thursday in sections of the Northeast and Midwest near the Canadian border.
Although no OFOs were in effect or pending for Wednesday, El Paso indicated that supplies are fairly tight in the West by reporting that it had set the probability of declaring a Strained Operating Condition or Critical Operating Condition due to low linepack to high Tuesday.
Rockies prices were quite strong with a low of 4 predicted for Denver. And the popularity of Rockies Express (REX) beginning its West segment’s interim service Saturday is already proving itself in at least a small way. REX reported that effective Tuesday until further notice, it is at capacity for delivered quantities to Northern Natural-Gage in Nebraska. Based on the current level of nominations, IT/AOR, secondary out-of-path and secondary in-path quantities are at risk of not being scheduled, REX said.
“You’d sure think prices would be up” everywhere again Wednesday, a Midcontinent producer said, in light of the especially cold weather that is anticipated for Thursday in many places.
A Gulf Coast producer said he had no time to talk Tuesday afternoon because he was having to cut nominations on Columbia Gulf due to an unexpected restriction at the Sea Robin meter (see Transportation Notes).
Contrary to another source’s speculation about storage pulls replacing some spot purchases in the Northeast, a Midcontinent producer said he thought prices in his area held firm because the market “just wants to hold off a bit longer from making big storage pulls.” Inventories “will be going up against some really big withdrawals last year beginning in a couple of weeks, so the deficit should go to a surplus, which should put a lid on prices in the next few weeks” he said, adding the caveat “If the weather forecasters are correct.”
Strategic Energy & Economic Research analyst Ron Denhardt expects a storage withdrawal of 71 Bcf to be reported for the week ending Jan. 11. Looking further ahead, Tim Evans of Citigroup projects pulls of 60 Bcf, 150 Bcf and 225 Bcf for the weeks ending Jan. 11, Jan. 18 and Jan. 25, respectively.
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