With the exception of several scattered flat to lower points that were concentrated in the Midwest and Louisiana, prices continued to rise at a large majority of points Tuesday.
Sources cited unseasonably chilly weather in several northern market areas, a small boost from screen firmness the day before and early-season demand for storage injections as factors in the upticks that ranged from a couple of pennies to around 60 cents. As on Monday, Northeast citygates tended to record the largest increases.
There will be no positive futures guidance for the cash market Wednesday after the May natural gas contract fell 17.9 cents Tuesday despite a widely followed report indicating that the Atlantic hurricane season will be very active again this year, although it is not expected to equal the devastating impact of the 2005 season (see related stories).
The Northeast is forecast to undergo at least one more day of cold Wednesday, but the Midwest is expected to see a slight degree of moderation. The South has already started to warm up at its eastern end, while air conditioners are starting to hum harder in Texas as highs in the 80s are due to persist into the weekend. It will be a wet day in the West, and that will include mountain snows.
Rockies prices showed considerable strength despite losing the flexibility of being able to inject into Questar’s Clay Basin storage facility for nearly two weeks. Clay Basin was shut in Tuesday for reservoir testing that will run through April 18 (see Daily GPI, March 24).
Even with a general lack of cold weather outside northern market areas, prices are staying strong this week, a Midcontinent producer commented. A big part of that, he believes, is that “people are going gangbusters” on putting gas into storage early in the traditional injection season. That’s helping to support cash quotes for now, he said, but it probably portends a price crash towards the middle or end of summer when storage facilities start filling up and reservoir pressures get so high that further injections are either impossible or very difficult. The producer said he was “really amazed at the price spreads” from the Rockies to the Midwest. Even with Rockies strength and minor Midwest softness Tuesday, the spreads still exceeded a dollar in some cases, he noted.
It’s “finally” warming up around Calgary, said a producer based there who was glad to see “spring-like weather for a change.” The operators may open area golf courses as soon they can unthaw them, he jested. The NOVA Inventory Transfer market was strong early but followed Nymex lower. It was very easy to cover variable transport costs from Alberta to the Northeast market Tuesday, but the spread to Malin “just barely” made it, he said. He thought Malin’s rise of about 20 cents Tuesday was due somewhat to the NIT strength of Monday.
Although its six-to-10-day forecast last week of above normal temperatures in the East wasn’t playing out very accurately early this week in the Northeast and Upper Midwest, the National Weather Service (NWS) continues to look for above normal readings in most of the eastern three-fourths of the U.S. next week. In its forecast for the April 10-14 period, NWS excludes only most of New England and the southern end of the Florida peninsula in expecting above normal temperatures everywhere east of a line running northward from the El Paso, TX area through central New Mexico and western Colorado, Wyoming and Montana. Only a relatively thin strip of normal conditions separates that area from where NWS predicts below normal temperatures everywhere west of a line running up the eastern edge of Arizona through central Utah, southwest Idaho, the northeast corner of Oregon and central Washington.
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