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Northeast Citygates Lead Weather-Prompted Price Hikes
Getting a little extra boost from a rebounding expiration-day screen, the uphill climb for swing prices got steeper Tuesday as what is touted as the coldest weather of what has been so far a decidedly mild winter season continued to expand into new market areas. Most gains ranged from just a couple of pennies to about 15 cents, but anticipation of a radical change in temperatures today had Northeast citygates registering larger increases, led by spikes of nearly half a dollar at Transco’s two Zone 6 pools.
But Zone 6 was hardly the king of the price mountain Tuesday. It was a grand time Tuesday for holders of firm service on Florida Gas Transmission. Though field prices saw only the moderate advances of the overall market, Florida citygates skyrocketed by more than a dollar as the pipeline issued an Overage Alert Day notice due to freezing temperatures due today in its market area (see Transportation Notes).
“The cold hasn’t reached us yet. We’re still in the upper 60s this afternoon,” said a Northeastern LDC buyer. However, it should be freezing by today, he added, and that prompted a big surge in buying Tuesday by regional utilities. The market-leading advances by Zone 6 were due in part to pipeline constraints. The pipeline had advised shippers that as of yesterday and until further notice, it would have zero IT available through the Linden (NJ) Regulator Station or downstream of Station 520 from the Leidy Hub.
The big chill also had not reached eastern states in the South, but they were due for their turn today. But back over in the region’s western end, Texas is expected to begin moderating a little from freezing conditions as early as today, according to The Weather Channel.
The PG&E citygate and related point Stanfield recorded the day’s rare small declines, while Malin and Sumas were barely higher, primarily due to a high-linepack OFO issued by PG&E for today. Southern California also was basking in load-dampening mild temperatures, but SoCalGas did not issue an OFO. Although Rockies gas was still being sought in the Midwest, the drop-off in California demand limited several Rockies points to small gains of less than a nickel.
A marketer observed that between the strength of all energy futures Tuesday (heating oil and crude oil joined gas in sizeable advances) and the fact that this week’s blast of winter is just starting to arrive in key East Coast market areas, it’s highly likely that swing prices will keep going up today. However, he had doubts about the bull market’s sustainability beyond that, saying that a retreat could happen as early as Thursday as frigid temperatures begin to ease in the nation’s midsection.
March bidweek activity was pretty light Monday, but was picking up substantially Tuesday when traders had the screen settlement in hand, a western marketer said. He quoted Kern River at just under $2 and border-SoCalGas in the high $2.20s.
Convergence was improving greatly for at least one trader. He quoted the PG&E citygate for March at $2.36, only a penny above his day’s average for swing gas.
Because of so much storage left to use, March demand is quite weak in market areas, noted an East Coast utility trader. Those who had bet on a weaker February aftermarket got burned, he said, but there’s a good chance of the same strategy paying off in the coming month.
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