While most of the cash market was higher by double-digit amounts Friday due to colder weather returning to the Midwest and South, Northeast citygates reversed price direction again and plunged by several dollars each, despite already being in the midst of an intense cold spell that was expected to continue through Monday.

Prices outside the Northeast increased between about a dime and 35 cents. Though they took huge dives, Northeast numbers remained well above the overall market in averaging more than $10.

The Energy Information Administration’s storage report, delayed until Friday by presidential inauguration activity Thursday in Washington, estimated a pull of 110 Bcf for the week ending Jan. 14. The volume was not much higher than consensus prior expectations centered around 105 Bcf. Nymex traders seemed moderately bullish for a while afterward, more likely due to sympathy with spiking oil product futures than the impact of the storage report. Crude oil for March delivery soared by $1.22 to $47.53/bbl after the Organization of Petroleum Exporting Countries raised its forecast of global demand during 2005. However, the natural gas screen eventually slid to $6.240, a daily closing loss of 6.8 cents.

A Gulf Coast marketer commented that after a plethora of discussion during December and January about how the screen was running so much higher than Henry Hub (more than $2 higher on occasion), it was extremely unusual to have the Hub trade at a premium of about 20 cents to February futures Friday.

“That won’t last,” said a Calgary-based producer about the Hub premium. “You have these occasional blowouts” in Hub/screen basis, but generally the Hub will stay at a discount, he said. “You’d like to see them track closer,” he added, but (in a reference to a Rolling Stones song title) you can’t always get what you want.

The producer noted that the Sumas/Malin spread pretty well matched up with transport costs Friday. It was better to flow from Sumas to Malin than from Alberta because of the heavy eastern demand on Alberta supplies, he said.

Some had expected the Northeast to maintain its lofty price positions Friday because frigid temperatures were due to remain through the weekend. However, one trader said, it’s still very cold in the Northeast, but load was easing, so the big price drops weren’t all that surprising to his company. There was “a lot of Monday-only selling,” he continued, and he also saw a few Sunday-only and Saturday-only deals getting done. There was good demand at first, he said, but then some “aggressive selling” emerged, driving prices much lower. The region is still on track for a warm-up starting Tuesday, he said.

One source speculated that utility use of storage may have been ratcheted higher in response to the recent price spikes in the Northeast, and its softening effect may have been enhanced by the usual drop in industrial load over a weekend.

The big Northeast price losses occurred in the face of a major winter storm that was forecast to add a heavy layer of snow from the Mid-Atlantic to New England over the weekend to temperatures well below freezing. In addition, winds were expected to intensify and exacerbate already painful wind chill factors.

Though not expected to be as severe as in the Northeast, wintry conditions were due to return to the Midwest and South after each had enjoyed relatively balmy weeks that carried Southern highs into the 70s. Although sunny, it was “absolutely cold” Friday in the Upper Midwest, a marketer said. “I think we got spoiled by that warm spell in early January.”

An arctic cold front was descending into the South. Although the worst weather was expected to be concentrated in the region’s Atlantic Coast states, even Houston was due to have a low around 32 degrees Sunday. In response to the colder change, Sonat told shippers that an OFO was probable Sunday, and Florida Gas Transmission warned of the possibility of an Overage Alert Day notice (see Transportation Notes).

The anticipated cold in the South did a lot to support Gulf Coast prices, a marketer said. However, she expects cash numbers to come down “a lot” Monday as weather load starts to ease in the Northeast. She reported trying to get some bidweek business stuff going Friday, “but nobody wanted to play with me.”

The West was predicted to remain relatively warm during the weekend, but likely was able to share in the overall bullishness due to growth in heating load in the intrastate Texas and Midcontinent/Midwest markets.

©Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.