If prices hadn’t been so abnormally high to begin with, it might have been considered a market meltdown. As it was, prices registered steep declines Friday that reached triple digits in the Northeast and at several other points. Rockies, Pacific Northwest and California quotes tended to see the smallest losses of 30-50 cents; otherwise it was rare for any point to fall by less than 60 cents.
New date-specific records for low temperatures were being set Friday in the South, with freezing conditions reaching down into Florida. A bit of warm-up was due over the weekend, according to The Weather Channel, but a “new shot of cold air” would arrive Monday before a more substantial warm-up begins around midweek. Meanwhile, residents of the Midwest and Northeast could look forward to some relief early this week from two weeks of bone-chilling cold, although temperatures will remain cold. The West remains divided between snowy and/or frigid weather in the northern half and mild conditions in the southern half.
Although they didn’t do it themselves and it wasn’t reported to NGI, a couple of traders said they could verify that a “small deal” got done on an online platform for $30 at Transco Zone 6-NYC. One speculated that the buyer’s only alternative was “penalty gas from the utility” that would have been even more expensive. He added that there weren’t all that many sellers out in the Northeast market Friday. “People expected softness but the demand was still there, so the lack of sellers caused late run-ups” that carried both of Transco’s Zone 6 pools up to peaks of $21-22 despite their diving overall quotes, he said. “You’d think that more people would be out there wanting to sell with prices still averaging above $10, but they must have had their reasons for laying low.” He concluded that with a little more than another month of winter left, prices shouldn’t go very much lower this week.
The other Northeast trader commented, “Today [Friday] is a little warmer, but still quite cold. Prices in the Northeast saw the most fluctuations. There were good [Zone 6] volumes done in the $20s. Some of the LDCs had restrictions interrupting all customers early when many traders sold their gas. But when the restrictions got lifted and the gas was able to flow again, traders were forced to buy it back at an exorbitant rate. Suffice it to say, the potential for losing money was high.”
Tennessee issued an OFO Balancing Alert late Thursday evening, saying it was experiencing significant linepack losses in the middle of its system (see Transportation Notes). However, a spokesman said the losses were not due to wellhead freeze-offs, but rather to the pipeline’s high load factor in the market area. And a Waha/Permian Basin trader said that contrary to rumors of freeze-offs in the area, he was not seeing any. “There are no production issues for us; it was a dry cold” that is less conducive to freezing a wellhead than wet cold, he explained.
A Florida utility buyer reported “piling it up on new purchases” because of the freezing weather that was threatening the state’s citrus and strawberry crops. She quoted a Saturday-only citygate at a little under $7, saying the single-day deal was because temperatures were due to start warming again around Sunday.
A Canadian producer had no weekend deals to report because of recent heavy demand leaving little production available to sell. “Now the weather is feeling more like I used to remember in winter,” not like the relatively mild conditions of a week earlier, he said. NOVA hit one of its lowest linepack levels in years Thursday because of heavy demand in both the province and from eastern Canadian and U.S. markets, he continued. In a sign of possibly soaring February indexes, the producer reported an intra-Alberta sale for next month at just over C$7, about a dollar above the January index.
Less gas than usual got traded Friday, according to a western marketer. “Prices came down so far and fast that a lot of people didn’t want to risk getting run over.”
Salomon Smith Barney analyst Kyle Cooper said his initial estimation for this week’s EIA report “looks for a draw in the 230-240 Bcf range.” That would compare with year-ago and five-year average numbers of “just 112 Bcf” and 142 Bcf, respectively.
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