Wednesday’s market almost repeated the one on Tuesday. Once again several flat to moderately higher points mixed it up with a lot of declines. Losses ranged up to about 15 cents, but as on Tuesday most were less than a dime.
The primary differences between the two trading days was that the Northeast was rising Wednesday instead of falling, and the opposite trend occurred in California and the Pacific Northwest.
January futures managed to regain the ground they had lost Tuesday and a little extra, rising just under a quarter. The gas contract began the morning softer but rallied after seeing the strength example of the petroleum-related trading pits. Following a government report of an unexpectedly large drop in U.S. inventories, crude oil padded its cushion above $33/bbl to $33.35, and the heating oil and unleaded gasoline (New York Harbor) contracts also made large advances.
However, “it would surprise me if today’s screen rebound managed to lift cash Thursday,” a Midcontinent-based marketer said. “There’s just not enough weather load in the Midcontinent/Midwest to justify higher prices.” He added that right now the market “is the quietest I’ve seen it so far since heating season began.”
Northeast citygates rebounded moderately despite more moderate weather being predicted for Thursday after a considerably wimpier version of the weekend blizzard revisited the region Wednesday. Most of the Midwest is expected to see more snow flurries Thursday, but Midwest citygates and Midcontinent field numbers ranged from flat to down about a dime because, similar to the Northeast, such conditions represented a moderation from weather earlier in the week.
Except for the upper Rockies, a majority of the West is enjoying unseasonably mild weather for mid-December. Denver was expected to reach highs of just over 50 degrees Wednesday and a little under 50 degrees Thursday.
The prediction of colder temperatures in the South proved correct as falling mercury levels stretched even into Florida, marking the state’s first taste of winter so far this season (western portions of the South were an exception with Texas highs in the 60s). A marketer quoting Florida citygates in the mid $6.80s noted that Florida Gas Transmission had wasted no time in following through on its advisory that an Overage Alert Day notice might become necessary (see Transportation Notes). But despite the OAD notice, “it’s not all that cold in Florida and demand wasn’t especially heavy,” he said. Also, the state will get warmer again over the weekend, he added.
On the opposite coast, a trader in the Los Angeles area observed, “It’s 75 degrees and sunny. This is why people live in Southern California.” She said Wednesday she made “nothing but sales” in deals at the state border around $6.00, down about 7 cents.
A producer commented that basis between the Gulf Coast production area and the Northeast was “getting squeezed. Last week it was something like $1.20 and now it is about 55 cents. And we are going to see more of that. I’m surprised it lasted this long.”
The National Weather Service outlook for the Dec. 22-26 period calls for above normal temperatures throughout the U.S. except in the lower South, where normal conditions are expected to prevail for the most part. The only below normal temperatures predicted by NWS are in the southern ends of Florida, Louisiana and Texas.
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