Prices reacted to heating load either already fading or being on the verge of fading in several market areas by dropping at nearly every point Wednesday. Declines ranged from a little less than 15 cents to around $1.25, with the biggest losses generally concentrated in the Midcontinent/Midwest, Texas Gulf Coast and Northeast.
The overall softness ignored the previous day’s screen gain of 3.7 cents and probably will do the same with Wednesday’s futures uptick of 19.1 cents as cash quotes are expected to plumb further depths Thursday, sources said.
Stormy weather will persist in the upper West Thursday, but area precipitation will be much more liquid than the icy variety being experienced earlier in the week. Afternoon highs are expected to be above freezing in most of the Midwest, including some unseasonable 60s in western Kansas, The Weather Channel (TWC) said. Very chilly conditions will stick around in the Northeast for one more day before a warming trend begins going into the weekend, and much of the Deep South will experience freezing morning lows but will warm up considerably by the afternoon, TWC said.
Northwest ended the last remaining OFO-like pipeline constraint and also is able to again provide up to 170,000 Dth/d of delivery capacity into CIG at their interconnect south of Green River, WY (see Transportation Notes). In another sign of moderating conditions in the West, Kern River reported normal linepack systemwide Wednesday after having low linepack levels in all four segments earlier in the week.
Although the Northeast remained at or near freezing levels Wednesday, it is due for a relatively mild weekend, said a marketer. Despite some support from the screen Wednesday, he expects cash quotes to continue lower Thursday and to “really get stepped on” in Friday’s trading for the long holiday weekend.
The marketer said a lot of baseload gas was already being traded for January, but added that there should be some deals left to complete next week. January first-of-month indexes may be more thinly supported than usual, he said, but they should have sufficient volume reported to make them viable. With the January futures settlement still a week away as of Wednesday, he didn’t expect very many fixed-price deals were being done this week.
A Gulf Coast producer agreed, saying January business was pretty well under way and he thought most of it would get done before the Christmas weekend.
A Calgary-based producer said the loss of heating load was pretty evident in his area with afternoon temperatures of about 50 degrees F., although they’re dropping to around freezing overnight, he said. Demand in the Pacific Northwest has dwindled considerably, he said, so Westcoast Station 2 was running about C30 cents or so behind NIT (NOVA Inventory Transfer). He expected to wrap up most of his January sales Thursday, but said he will be “leaving just a little bit to be done next week.” He reported trading Sumas at last-day settlement basis of minus $1.94, adding that of course he won’t know what price that equates to until next Wednesday.
Saying his confidence level was low, Citigroup analyst Kyle Cooper on Wednesday changed his final estimation of the storage report for the week ending Dec. 16 to a withdrawal of 164-174 Bcf. That was less than his previous final projection of 173-183 Bcf but more than his initial estimation of 150-160 Bcf.
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