It appeared that the overall cash market was stronger Wednesday due to losses at most points a day earlier giving way to a mix of mostly small movement up or down, with gains decidedly outnumbering losses. However, spikes at Northeast citygates Tuesday had shifted into reverse, with multi-dollar plunges at all of the Northeast delivery points Wednesday.
Most points were flat to up about a quarter, with the Rockies garnering the lion’s share of upticks in double digits. Declines ranged from a little less than a nickel to about $3.75. The biggest loss to a non-Northeast citygate was a little less than 35 cents.
Wednesday’s physical market had negative guidance from the previous day’s drop of 15.9 cents by February futures, but cash trading will have some support Thursday after the contract rallied by 13.8 cents Wednesday (see related story).
Although lows in the 20s will continue to prevail at most Northeast locations Thursday, temperatures will be rising overall and most of the region can expect highs to get back above freezing. Transco will continue a series of pipelines lifting cold weather-related restrictions this week by canceling an Imbalance OFO Thursday (see Transportation Notes).
Florida Gas Transmission (FGT) not only did not end an Overage Alert Day (OAD) but tightened its imbalance tolerance. But since an OAD takes effect on the day the pipeline announced it, many FGT traders likely expected the OAD to end Thursday, especially with Orlando’s low around freezing to be largely counterbalanced by a high in the low 60s. The Florida citygate, which had jumped 49 cents Tuesday, was up less than a dime Wednesday, while FGT Zones 2 and 3 in the production area rose and fell about a nickel each, respectively.
The outlook was much the same in the rest of the eastern half of the South, with lows in the 30s representing a warming trend. Meanwhile, the weather picture is considerably milder at the South’s western end, with New Orleans expected to peak around 70 Thursday and Houston expecting highs in the mid 70s for the next two days.
Southern Natural Gas said it appeared that actual temperatures “were significantly colder than forecasted for Tuesday’s gas day and initial indications are [that] Southern set a new peak day record as a result.” However, a spokesman was unable to confirm Wednesday afternoon whether there actually was a new peak day record.
The Midwest forecast was mixed but mostly for moderately higher temperatures. But that will be changing Friday after a cold front starts moving into the Upper Midwest Thursday. A Northern Natural Gas bulletin board indicated the bone-chilling cold that is on the way, saying its system weighted average temperature is expected to dive from around 24 degrees Thursday to three Friday and zero Saturday.
High temperatures will be near to above average for the season in most of the West, The Weather Channel said. With forecasts of Southern California highs in the 60s, SoCalGas issued a high-linepack OFO for Thursday (see Transportation Notes). But because the OFO notice was not sent until Wednesday afternoon well after cash trading had ended, the price impact was limited as the SoCal citygate and Southern California border dropped only about a nickel each.
Analyst Stephen Smith of Stephen Smith Energy Associates said he expects a storage pull of 193 Bcf to be reported for the week ending Jan. 16. Looking ahead to the next three reports, Tim Evans of Citi Futures Perspective projects withdrawals of 175 Bcf, 155 Bcf and 165 Bcf for the weeks ending Jan. 16, Jan. 23 and Jan. 30, respectively.
“The recent weakness in the gas complex shows even some of the coldest temperatures in five years across the Midwest and Northeast are no match for deteriorating economic conditions and the consequent erosion in underlying natural gas demand,” according to a note from SunTrust Robinson Humphrey/the Gerdes Group analysts. “Under normal economic conditions, last week’s weather could have easily produced a storage withdrawal north of 200 Bcf. However, given acute weakness in industrial and gas-fired power generation demand, it is unlikely that more than 170 Bcf was pulled from storage last week.”
The National Weather Service (NWS) predicts above-normal temperatures during the Jan. 26-30 workweek everywhere south of a line running from West Texas to the northern border of North Carolina. The agency’s six- to 10-day forecast posted Tuesday afternoon calls for below-normal readings everywhere west and north of a line running northward through eastern Arizona and Utah, where it turns eastward so that the below-normal area includes all of the Dakotas and Iowa along with all but the northeast corner of Minnesota. Below-normal temperatures are also expected in northern New England.
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