Cash price moves in the Northeast and East Thursday once again separated from the rest of the market, with the overall average market gain a stout 33 cents, but the remainder of market points showed a rise of just over a nickel. Many eastern points posted multi-dollar gains, recording yet more price records (see Daily GPI, Jan. 24), but higher prices were posted at nearly all locations, with just a handful of points losing a few pennies or less.

The Energy Information Administration reported a draw of 172 Bcf, under last year’s 176 Bcf, and not enough to satisfy the bulls. At the close February had fallen 10.8 cents to $3.446 and March was off by 9.9 cents to $3.454. March crude oil added 72 cents to $95.95/bbl.

Cold blanketing much of the East and up through New England looked like it might stick around for a while (see related story). An operational flow order on Transcontinental Pipeline remained in effect. “They don’t want to be short gas to a market that some customer is pulling 10,000 Dt/d and only delivering 8,000 Dt/d. Whether the gas is coming in at the gate or a supply point, they don’t want anybody shorting the pipeline,” said a Houston trader.

He added that from one perspective the flow order doesn’t make sense to include the entire pipeline which runs from South Texas to New York City. “In reality they are not going to be short South Texas gas, they will be short the market area where its cold. It’s 70 degrees here, they aren’t short gas in Texas. However if someone is short their nom[ination] and they have nominated 10,000 and only putting in 8,000, and its going all the way to New York, then they have to make that gas up somewhere.”

“They [Transco] will find this out in a year or so like Tennessee did that they will end up being two separate pipes. Tennessee found they had a Zone 4 to Zone 6 “pipe” and a Zone 0 to Zone 2. The gas from the south never flows all the way to the north,” the trader said.

“At these high prices we’re not making money. We are just hoping everyone adheres to their deals. It’s supposed to warm up for a few days and then get cold next week, probably not as cold as now but still cold. There’s probably going to a [price] dropoff for the weekend, but Saturday and Sunday are supposed to be cold and Monday not as cold,” he said.

Next-day gas on Algonquin jumped about $3.27 to $34.53 and deliveries to Tennessee Zone 6 200 L added 43 cents to $32.15. Buyers at Iroquois Waddington saw their prices rise $3.49 to $28.54.

Friday gas into Dominion rose just 4 cents to $3.57 but deliveries on Tetco M-3 rose about $1.31 to $12.52. Gas bound for New York City on Transco Zone 6 added $1.74 to $37.07.

At other delivery points gains were more tempered. Chicago Citygate was seen 6 cents higher at an average $3.77 and deliveries to the Henry Hub were quoted 4 cents higher at $3.56. At Opal Friday gas came in at $3.53, a gain of 4 cents, and at SoCal Citygate parcels were seen up 6 cents to $3.82.

Although the reported 172 Bcf withdrawal was greater than last year’s 162 Bcf pull, market prices failed to respond. “The range of expectations for this report were quite wide and so we’re not seeing a strong immediate price reaction,” observed Tim Evans of Citi Futures Perspective. “The data is strong enough, however, to affirm the tighter supply/demand balance of recent weeks and set the stage for a stronger withdrawal in the next report when the impact of current cold temperatures will be recorded.”

Estimates of the report varied widely. A survey by Energy Metro Desk of 40 market participants revealed an average 169 Bcf draw with a wide range of 143 Bcf to 183 Bcf. Industry consultant Bentek Energy, utilizing its North American flow model, calculates a pull of 179 Bcf and Evans was looking for a 160 Bcf withdrawal. Last year 162 Bcf was withdrawn and the five-year average pull is 176 Bcf.

Although expectations were for a withdrawal close to last year and within striking distance of the five-year average, heating requirements reported by the National Weather Service (NWS) for the week ended Jan. 19 are below normal. NWS reports that New England saw 212 heating degree days (HDD) or 71 below normal and the Mid-Atlantic states of New York, New Jersey, and Pennsylvania endured 198 HDD or 66 below its normal accumulation. The Midwest from Ohio to Wisconsin shivered under 255 HDD or 42 below its normal seasonal tally.

Evans calculates that the year-on-five-year surplus currently at 316 Bcf will fall to 269 Bcf by Feb. 8. “This reduction in the storage surplus is normally supportive for prices over the intermediate term, although we note that in the current context it may not be enough to offset what could be some seasonal complacency regarding supplies that tend to develop as we move into the second half of the heating season.”

The report for the week ending Jan. 18 was the second week that the EIA incorporated separate columns for the Producing Region’s salt cavern and non-salt cavern storage facilities. Non-salt cavern facilities are more often used for seasonal storage, while salt cavern facilities lend themselves to frequent cycling. The region’s salt cavern storage figure dropped by 15 Bcf from the previous week to 260 Bcf, while the non-salt cavern figure declined by 37 Bcf to 800 Bcf. The EIA first split the Producing Region’s facility types in storage report footnotes in March 2012 in an effort to give analysts and industry more comprehensive information on the relationship between natural gas inventory changes and types of storage facilities (see Daily GPI, March 26, 2012).

Traders see minimal change on the weather horizon. “Weather forecasts are little-changed from yesterday [Wednesday], with below to well below-average temperatures expected across much of the East in the next five days, followed by a shift warmer in the 6-10 day forecast and then the return of below to well below average temperatures in the beginning part of February,” said Addison Armstrong of Tradition Energy in a morning note to clients.

©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.