The boost that prices got from unexpected cold weather in the first two days of the week came to an end in the East Wednesday as moderating trends were due to be under way. However, quotes continued to increase at most western points as winter storms rage through the region.
Much as they had led a rising market on Monday and Tuesday, Northeast citygates were out in front of declines Wednesday that ranged from a little less than a nickel to about 65 cents. A large majority of the losses were in double figures.
Only small decreases in Western Canada and at a couple of related points (Kingsgate and Stanfield) averted a solid front of firmness in the West. Heavy snow was forecast for Thursday in the mountains of the interior West as a winter storm moves eastward from the coast. Highs in the upper 20s are expected from the Colorado Rockies northward, The Weather Channel said.
Meanwhile, temperatures were already starting to rise in the Midwest and were due to follow suit in the Northeast, where snow fell in some sections Wednesday. Mild early-spring weather will continue in the South, where highs in the 70s and 80s are predicted.
Nymex’s petroleum futures complex flexed some price muscle Wednesday, but the May natural gas contract was considerably more ambivalent, rising an almost imperceptible 0.4 cent at settlement after spending the morning in the red.
The cold conditions in northern market areas of the East during the first two days of the week were “very unexpected,” considering forecasts from last week had indicated above normal temperatures this week throughout the eastern U.S., said a Northeast marketer. It snowed a bit in New York City and New England Wednesday, he said, but a warm-up should be starting Thursday. It’s a “very bearish weather forecast” out through at least mid-April, he noted.
The marketer expects prices to “chop around” for much of this month, calling it a typical spring trading pattern. Despite Wednesday’s big citygate drops, Northeast prices are still relatively strong in maintaining basis spreads of a dollar or so above the Gulf Coast, he said. “It seems that at these basis levels, there shouldn’t be all that much buying for storage injections,” he continued, but there does appear to be a lot of that going on. The Nymex strip indicates that the cheapest injections are available now and not later, he said.
A marketer in the Upper Midwest was glad to see temperatures getting to 50 degrees or higher in her area following a frigid start to the week. It will be chilly again in the 40s this weekend, then mild conditions will return next week, she said. However, the region is not out of the woods yet as far as leaving winter behind, she added; occasionally it will find cold weather resurfacing as late as April and May.
With 45 companies reporting to it, Minerals Management Service (MMS) said 1,362.18 MMcf/d of gas production remained offline Wednesday in the Gulf of Mexico as a result of Hurricanes Katrina and Rita last year. That was 30.59 MMcf/d less than MMS reported two weeks earlier. Cumulative shut-ins since Aug. 26, 2005 now total 711.634 Bcf, or 19.497% of the approximately 3.65 Tcf in annual Gulf output, MMS said.
Although some called for a build of as much as 20 Bcf in Thursday morning’s storage report, the consensus estimate was a withdrawal of about 18 Bcf in a Reuters news service survey of 25 industry players. The expectations for a draw ranged as high as 57 Bcf, Reuters said.
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