Several flat points and a couple of declining ones notwithstanding, prices were able to mount a rally in a large majority of the cash market Thursday. An influx of colder temperatures with occasional snowfalls into northern market areas spurred the general firmness, aided almost imperceptibly by a small futures increase of just under 2 cents the day before.
Northeast citygates led the uphill charge, with overall gains ranging from a little less than a nickel to nearly 85 cents. Outside the Northeast, upticks were limited to around 35 cents or less.
Thursday’s advance had been signaled to some degree by the previous day’s tendency toward higher quotes in late trading (see Daily GPI, March 2).
By virtue of its rise of more than 80 cents Thursday, Transco Zone 6-New York City joined New England points (Tennessee Zone 6, Iroquois Zone 2 and the Algonquin citygate) as the only ones priced at a premium to first-of-month indexes in the early March aftermarket.
Whether cash gains can be sustained into the weekend is iffy. The screen did contribute another small increase of 2.7 cents Thursday, the storage report was considered moderately bullish, and low temperatures will remain in the freezing zone across Canada and much of the northern U.S. Friday. However, sources didn’t consider the current cold snap especially severe, the southern half of the U.S. will stay fairly mild, and the usual weekend drop in industrial load will come into play in Friday’s trading.
The Energy Information Administration surpassed nearly all expectations in reporting a storage withdrawal of 171 Bcf for the week ending Feb. 24. The volume was a far cry above both year-ago and five-year average comparisons (see futures story). Yet the screen waffled around close to either side of flat before finally settling for a second straight minuscule increase.
The Northeast and Midwest should remain cold and somewhat snowy Friday, while the South will begin a moderate cooling trend that nevertheless will leave the region basking in early spring-like weather. Storms will dominate the western climate and the West Coast will be colder than normal, but much of the West will see above average temperatures, The Weather Channel said.
It looks like the Northeast has one week of winter left, observed a Gulf Coast producer. Its current cold spell will last a couple of days into next week, then the region will join the rest of the country in relatively moderate temperatures, he said. Henry Hub-Northeast basis has stayed about as strong as it’s been all winter, so it’s still paying off to be able to transport gas to the market area, he added.
The producer said he expects basis to remain strong Friday, but considered it a tough call on the actual direction of pricing. The screen wasn’t showing much guidance to cash traders Thursday, he noted, and it’s not terribly cold as far as absolute temperatures go.
A Midcontinent marketer found it difficult to understand how just about everybody has been saying how bearish the gas market has been for months, but it still keeps managing to pull out rallies like the one Thursday fairly regularly. It flies in the face of storage supplies currently flooding the market, he said.
The producer said Oklahoma pipeline pressures have been extremely high recently because of huge storage withdrawals, which makes it harder for new wellhead production to enter the pipe. He reported that one pipeline told him recently that no matter what price he had to accept, “move the gas.” That is, make sure his supplies find a secure home and don’t get left on the pipe’s system, he explained.
A marketer in the Upper Midwest said a pretty good amount of overnight snow had lasted into Thursday morning, “but it’s stopped and the skies are turning blue” that afternoon. By next week her area will be pushing 50-degree temperatures, she said.
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