Prices kept falling at a majority of points Thursday as traders saw moderating weather starting in several areas Friday through the weekend and storage use continued to keep a lid on new spot gas purchases. The previous day’s 4.9-cent drop by February futures was an additional, albeit minor, bearish influence.
Northeast spikes of nearly $1.50 again ran against the grain of overall market softness. Unlike Wednesday, when losses by Transco’s two Zone 6 pools were at odds with the strength at other Northeast citygates, the Zone 6 points participated in Thursday’s large upticks, although they and Texas Eastern M-3 were the only ones failing to realize triple-digit gains. Transco Zone 6-New York City had the day’s top quote of $16.95.
Quite a few flat to slightly higher points, mostly in the Gulf Coast, were interspersed among losses ranging from 2-3 cents to about 30 cents. The Midcontinent, where a warming trend would be under way Friday, was where many of the largest declines were concentrated. Sumas was the only location outside the Northeast to see a significant increase of about 20 cents.
Warmer conditions also were forecast for Friday in the Midwest, South and Rockies. The Northeast will see relatively little change in temperatures Friday but will moderate to near-average thermometer levels Saturday and Sunday, according to The Weather Channel.
Some of the pipelines are lifting OFO-like constraints associated with this week’s cold snap (see Transportation Notes), but Southern Natural Gas and Florida Gas Transmission initiated new ones Thursday.
The Energy Information Administration fell slightly short of consensus expectations in the high 150s Bcf when it reported a 155 Bcf storage withdrawal for the week ending Jan. 18. The report was essentially neutral to Nymex traders, and the day’s 18.1-cent increase by February futures was attributed largely to short-covering (see futures story).
It was definitely rising storage use that kept prices mostly softer this week despite harsh winter weather persisting through Thursday in some regions, a Houston-based marketer said. People are draining their storage accounts as hard as they can during these frigid periods because they know there may not be many more of them left in what’s left of the heating season, he said.
The marketer said a Chicago-area trader had told him Thursday that this is the time of year when the trader wished he lived in Houston. Chicago’s low of 3 degrees Thursday (accompanied by snow) was expected to rise to around 23 Friday with cloudy skies. Houston had a low of about 36 Thursday, but its forecast called for high temperatures ascending into the low 70s Sunday and Monday.
Thursday’s Nymex strength won’t be enough to rally cash prices Friday, the marketer continued. Besides the warm-ups getting under way, the weekend factor of drops in industrial load will be involved, he said. However, he expects only minor price drops Friday in most cases, saying it will be getting warmer but still be pretty cold in the northern market areas this weekend.
Unlike last month, when the holiday schedule prompted a lot of January baseload business to get done around mid-December, the marketer perceives most February deals as getting done during the regular bidweek, which starts Friday, this time. He reported not having seen all that much bidweek trading get done yet; “some people have gotten to first base” on February deals, but few have moved on to second base, he said. Chicago basis was being bid at plus 12.5 cents Thursday and offered at plus 14 cents, he added.
A Midwest marketer said temperatures had been below freezing in her area all week, with sub-zero wind chills. Highs should start getting back a little above the freezing level Saturday, she said, which may not seem like it to some people “but that’s an improvement.” It will still be cold enough Friday that her company had to buy a little spot gas Thursday along with withdrawing some storage for its customers, she said. The marketer said she has to figure that it’s the abundance of storage in the Midwest compared to the Northeast that has had Midwest prices softer since Tuesday while the Northeast recorded big gains Wednesday and Thursday.
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