It was kind of a doldrums-type market Thursday, with flat quotes at many points and none of the other ones straying more than about a nickel up or down. Spotty returns of chillier weather in some areas, along with the previous day’s futures uptick of 4.3 cents, assured that small gains handily outweighed the rare small loss.
A few points falling by 3 cents or so were the exceptions to overall numbers ranging from flat to about a nickel higher.
Though within the overall range of expectations, the Energy Information Administration’s report of a 111 Bcf withdrawal from storage during the week ending March 5 was slightly less than consensus estimates in the mid 110s Bcf. It also provided fodder for Nymex traders to push April futures 11.9 cents lower on the day (see related story).
Although mild conditions continue to dominate the South, some isolated circumstances — such as the Memphis, TN high being forecast to drop from about 73 Thursday to the low 60s Friday — may have given a small jump-start to new heating load. Some locations in the Midwest were also due to see modest temperature declines, but overall the Midwest and Northwest would continue to see essentially seasonal cool weather for mid-March.
As usual, the status quo was still the western norm: below-freezing lows in the Rockies and cool to mild elsewhere. However, except for such central Canadian locations such as Winnipeg, much of the nation was due to experience lows around freezing or slightly higher Friday.
Even with his region’s lows staying below freezing, a Rockies producer lamented that “weather load’s just turned to mush,” citing relatively moderate highs in the 40s in Denver. Temperatures are still a little below average for this time of year but not especially cold, he said.
The producer estimated the Cheyenne Compress Station outage on Rockies Express (REX) is having about a 200 MMcf/d impact in reduced production, but that’s not really making any difference in the current low-demand weather situation. It used to be that Rockies prices “would collapse” under such a constraint, but that’s no longer the case with greatly increased takeaway capacity in recent years, he said.
Just as REX greatly enhanced Rockies basis for gas going eastward, the proposed Ruby Pipeline should similarly tighten basis differentials toward California and other West Coast markets, the producer said. He noted that the falling output of Canadian gas should benefit Rockies pricing competitively.
In a slightly bullish signal, he noted that prices typically turn upward during April in the early stages of storage injection season.
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