Plunges of about a dollar in the Northeast and about half a dollar on Dominion in Appalachia far outran moderate softness in the rest of the market Friday. The February aftermarket started with losses elsewhere that tended to range from about a nickel to a quarter, and the Rockies even registered some small gains.
The declines were to be expected, sources said. The Northeast and Midwest were due to experience some of their mildest temperatures in about three weeks over the weekend, and the drop in load that typically accompanies a weekend played its part, they said.
The screen stayed close to flat all morning and thus had little influence on cash quotes. Crude oil futures retreated a bit from Thursday’s level, but still remained handily above $33/bbl as traders hesitated to take many short positions a day after President Bush warned Iraq that it had “weeks, not months” to disarm.
The smallest gas price drops of about a dime or less were clustered in the West, where power prices surged in response to date-specific record-setting heat in the Los Angeles area and an increase of a little more than 2,000 MW generation outages on the California ISO grid (see story in Power Market Today).
A marketer said that although Dominion plunged on average, he saw a rebound in late deals. Several Gulf Coast points also got late bounces, he added. “We’ll start seeing some [colder] weather return first in the Midwest and then in the Northeast next week, so I see today [Friday] as a lull in the action and a possibility of a new cash rally as early as Monday.”
A Northeast utility buyer helped confirm that scenario, saying, “We’ll be a little bit warmer through the weekend, and then back to below normal around midweek.” And a Midwestern utility buyer had nothing but Monday-only deals to quote at Northern Natural’s Ventura and demarcation points. “We won’t have much weather load over the weekend,” he explained, “but then it’s back to freezing and 40-mph winds on Monday.”
Northern Natural was allocating at several points Friday due to a force majeure event on its Mitchell to Spraberry Line (see Transportation Notes).
Another trader attributed the Gulf Coast mini-rallies to “some shorts late that people had to cover. I hate to be in that squeeze.”
A Florida utility staffer said area weather had gotten too mild for him to need any swing gas. He commented that he was taking advantage of a relatively quiet day “to review our plans for this summer, when I’m sure we’re going to start seeing a lot of Overage Alert Days on FGT again.”
Intra-Alberta numbers came under some downward pressure as NOVA changed its imbalance tolerance to 0/-4 (see Transportation Notes) to keep shippers from packing the pipeline over the weekend. A marketer quoted intra-Alberta in the mid C$6.70s, down nearly a quarter.
“We’re not really doing that much,” said the buyer for a Midwestern LDC. “Most of my purchases are termed up, and we’re just living off storage for any extra requirements. As for storage, we are looking pretty good at still 56% full despite the cold winter. The temperature here has not been above freezing since Jan 10. Feel free to call back in the spring when I might be back out in the market.”
February prices “definitely got stronger Thursday” for a western trader, who did Malin deals at $5-plus and in the $4.80s at Sumas that day after having traded them nearly a quarter lower earlier.
A source trading the Chicago citygate agreed that “things really ended on a strong note” in bidweek, saying a lot of Chicago business got done in the mid $5.70s late. Quotes had ranged from the high $5.20s to the $5.50s early in the week.
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