Cash price movement was mixed for the second day in a row Thursday, but this time traders tended to favor the upside more. What may be the last hurrah of the 2005-06 winter appeared to have settled in for an extended stay in northern market areas, while much of the West will remain stormy and cold through at least the weekend.
Just about all of the minority declines of up to a little more than a dime occurred in the Gulf Coast. Otherwise, quotes ranged from flat to about 15 cents higher.
Thursday’s market left most points fairly close to their first-of-month index levels. Deficits to index ran as large as about 30 cents (Carthage in East Texas) while premiums were as great as nearly a quarter (Texas Eastern-Kosciusko).
The Energy Information Administration’s report of a 55 Bcf storage withdrawal for the week ending March 10 jibed pretty closely with prior expectations. As so often happens, Nymex traders cared little about the actual number anyway, having already factored abundant storage levels into their trading strategies long ago. Instead, they took their cue from very strong petroleum-based futures in sending April natural gas up 12.4 cents on the day.
In addition to the cold weather boosting heating load in other regions, upper sections of the South can expect to feel a bit more chill over the weekend than they have been used to in recent weeks. Precipitation could even turn into snow in parts of Tennessee by Tuesday, according to The Weather Channel.
A Gulf Coast producer expects to see mostly higher prices again Friday. He noted the strength throughout Nymex’s energy futures complex Thursday, and that the South will be contributing a modicum of heating load to what already exists in other regions. However, he said little of the current cold wave is especially severe, so the cash gains he looks for Friday are unlikely to be as large as the screen’s dime-plus rise Thursday.
The producer added that it seems like storage withdrawals should be large enough to keep cash prices from rising any further. The storage picture indicates a “bleak” price outlook unless substantive cold weather lasts well into April, he said. However, some storage operators are being flexible about extending deadlines for having specific amounts withdrawn, he said, adding that not everyone is tied rigidly to the traditional March 31 end of withdrawal season.
A producer who trades the Northeast also expects more small price increases Friday, saying the cash market has prior-day screen support for a change to help offset the usual weekend slump in industrial demand. “All the forecasts are now agreeing that cold weather will last through the end of the month,” at least in the Northeast, he said. Earlier this month the region was 10 degrees or so above seasonal norms, but it’s looking like 10 or so below now. Even with weekend balancing concerns, it should be cold enough Monday to assure decent heating load for Friday’s weekend purchases, the producer added. March 21 is the official first day of spring, but it looks as if late-winter cold will linger for a while longer along the East Coast, he said.
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