Generally moderating forecasts for Friday that had The Weather Channel’s website asking “Late December…or Fall?” in its daily headline Thursday were a factor in Northeast quotes joining the softening trend that had begun on the previous day in the rest of the market. A small prior-day futures loss contributed a bit to downturns by all but a couple of trading locations.
A few flat points broke the overall string of losses ranging from 2-3 cents to nearly $2.20. Except for the triple-digit plunges in the Northeast, the next-biggest drop was around 45 cents at Tennessee Zone 4’s Line 300, where the onslaught of Marcellus Shale production attempting to get aboard the pipe apparently was having an effect again as the point’s low-end quote was $1.90.
“The bigger they come, the harder they fall” may have been an apt description for the Northeast market. After recording large gains — including several dollar-plus spikes and a $6.90 peak quote at the Algonquin citygate– during the first two trading days of the week, the region was finding the downhill sledding just as steep as the ascent. Line 300 in Tennessee’s Zone 6 (also a New England point) took the day’s biggest price hit of about $2.30.
Because of the month-to-month transition occurring Sunday, Thursday’s trading covered flows for Friday and Saturday. That means part of a long weekend, with its concurrent extra reduction of industrial demand, was a minor factor in Thursday’s price softness.
Friday deals will be for Sunday-Tuesday deliveries.
Henry Hub fell only slightly short of convergence with January futures. Finishing the month averaging around $3.02, the Hub was about 6 cents below the January screen settlement at $3.084.
Analysts were coming closer to the mark than in previous weeks, but their consensus expectations in the mid 80s Bcf still modestly exceeded the Energy Information Administration’s report of an 81 Bcf withdrawal from storage during the week ending Dec. 23. With the pull coming far below the five-year average of 122 Bcf, Nymex traders naturally took a bearish stance in pushing February futures 9.4 cents lower in their debut as the prompt-month contract (see related story).
Subfreezing lows will be fairly scarce Friday outside sparsely populated elevated sections of the Rockies and on either side of the Canadian border. Cool to chilly will be descriptive of most areas, with somewhat springlike conditions due in parts of the South and Southwest.
Although the Northeast will remain one of the colder regions in the U.S., it can expect temperatures to be 10 degrees or so higher Friday into the weekend before getting a return visit of frigid weather early next week. The Pacific Northwest will see a lot of climate action in the form of heavy rain, mountain snow and high winds in some spots.
Westcoast said linepack was returning to a “healthy” level, but El Paso reported problems with excessive linepack (see Transportation Notes).
Northern Natural Gas revealed the relative moderation of temperatures currently in its Upper Midwest market area. Citing a normal system-weighted temperature of 16 at this time of year, a bulletin board posting projected a tight 34-35 range of average temperatures for Thursday through Saturday preceding a drop to the system norm Sunday.
A Texas-based marketer wasn’t especially surprised by Thursday’s softness and expects more of the same Friday, but he said it’s safe to expect a general price rally Tuesday when a major cold blast will be invading much of the East.
The marketer said it appeared that most bidweek business got done Wednesday on the futures expiration day and was tapering quite a bit Thursday. However, besides being busy trading January baseload Wednesday, his company got quite a lot done prior to the Christmas weekend.
The dropoff in January activity was confirmed by IntercontinentalExchange (ICE), which reported just 3,000 MMBtu changing hands at the Chicago citygate Thursday compared to 20,800 MMBtu Wednesday and even larger volumes on the preceding Friday and Tuesday. Chicago numbers fell another 7 cents or so to a $3.17 average Thursday, ICE said. Houston Ship Channel deals also declined in value by about a dime to the mid $2.90s, it added.
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