Prices dropped at nearly all points Wednesday as a Thursday return of especially severe winter weather that had been anticipated when the week began apparently was encountering delays. Tuesday’s 15.7-cent decline by February futures also contributed to cash market softness. Expectations that a relatively light storage pull will be reported for last week may have been another factor, one source said.
A few flat to about a nickel higher points, mostly in the West, averted an across the board run of falling quotes. Otherwise, losses ranged from 2-3 cents to about $1.15. Once again Northeast citygates led the downhill charge.
Snow is a feature of the Thursday forecasts from the Rockies through the Midwest into the Northeast, and frozen precipitation of various types will extend as far south as the western Carolinas, according to The Weather Channel. However, other than the Midcontinent/Midwest, temperatures will not be making sizeable drops, and there will even be warming trends in parts of the South and the Rockies.
Although prices may not have acknowledged the imminence of colder weather that now appears to be largely slated for Friday through the weekend, a couple of pipelines did. Southern Natural Gas and Northern Natural Gas will implement either an OFO or a similar action Thursday in preparation for anticipated heavy loads (see Transportation Notes). Texas Eastern relaxed an imbalance restriction through Thursday but said it would be reinstated Friday.
The supply outlook was mixed in the West. PG&E projected that its linepack will drop significantly below minimum target levels Friday and Saturday. However, El Paso lifted a Strained Operating Condition that it had declared Tuesday due to low linepack.
A Gulf Coast producer was a bit puzzled about the prevailing cash weakness, asking rhetorically, “Who knows why?” He thought predicted Thursday lows near freezing or lower in northern market areas should have been enough to rally prices. However, he considered the potential for a rebound Thursday as rather iffy, considering the further screen decline of 6.3 cents Wednesday. He speculated that spectacular crude oil futures weakness over the last couple of days may have had an indirect impact on gas prices. He reported having minor problems with an unexpected Columbia Gulf constraint at the Sea Robin meter but said otherwise transportation was pretty smooth.
A utility buyer in the Lower Midwest also thought Wednesday’s lower prices were contrary to fundamental support. Snow began falling at mid-afternoon Wednesday and the utility’s service area should get 3 inches overnight, she said. Also, temperatures would be plunging to near zero at night over the next four to five days, she added.
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