The cold snap that is developing across much of the eastern U.S. had only limited ability to keep price firmness going Wednesday. Most points fell in deference to forecasts that the eastern cold may be less severe than previously expected and not last much longer than next week (see futures story). A plethora of excess supply issues in the West also contributed to price drops on the day.
A majority of the market was flat to down nearly 95 cents. The Gulf Coast and Northeast citygates recorded most of the gains ranging from 2-3 cents to about 20 cents.
Mild weather in much of the West outside the Rockies and Pacific Northwest contributed to an already established regional oversupply situation that was getting worse. Several new OFOs or similar actions (see Transportation Notes) were added to existing ones such as the Pack Strained Operating Conditions on El Paso and CIG. Both of California’s two giant distributors, PG&E and SoCalGas, had high-linepack OFOs in place for Thursday; the Southwest Gas LDC issued a “hold to burn notice” due to excess linepack on upstream pipelines; Kern River continued to report high linepack systemwide; and Northwest warned shippers that possibly it was only days away from having to issue OFOs because of excess northbound nominations through Kemmerer Compressor Station, a longtime bottleneck on the pipeline.
Thursday’s cash market will have negative screen guidance after December natural gas futures once again demonstrated a disconnect from soaring crude oil prices by falling 11.4 cents.
Citizens of the South and Northeast will be in for climate shock as Wednesday’s generally moderate temperatures become much chillier Thursday. The abrupt change from shirt-sleeve weather to sweater/overcoat conditions had a lot to do with keeping Gulf Coast and citygate numbers afloat Wednesday.
The Midwest will be transitioning from already cold to even colder, but that did little to keep most Midcontinent and citygate points from softening. ANR ML-7 and Chicago (including Alliance deliveries) were the only Midwest points to rise. Chicago’s forecast for Thursday included a low of 29 degrees.
“I have my winter coats out,” said a marketer in the Upper Midwest, where freezing lows are expected Thursday. However, she noted that the Midwest has had unusually warm weather for longer than normal so far this autumn. She also observed that national near-term weather maps “seem to have an awful lot of the U.S. colored blue” (indicating below-normal temperatures). However, although some forecasts have cold temperatures lasting through the end of November in the East, she takes comfort in the anticipation that above-normal warmth over the following three months (see Daily GPI, Nov. 14) will bring prices down for her company’s clients.
The marketer said there haven’t been any volume restrictions at Consumers Energy citygate for a while, which she assumed was because enough storage gas had been used during a recent cold spell that the utility has some flexibility again.
Just about everyone looks for the first storage pull of the young withdrawal season to be reported Thursday. Stephen Smith of Stephen Smith Energy Associates looks for a draw of 24 Bcf for the week ending Nov. 9, while a Reuters survey of 21 analysts found an average expectation of 11 Bcf being taken out. Estimates ranged from a build of 3 Bcf to a draw of 24 Bcf, Reuters said.
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