Huge spikes that often well exceeded a dollar at Northeast citygates were in sharp contrast to falling prices elsewhere Thursday. Although lows would continue to be around freezing or below at many locations Friday, including some in the South, a continuing moderation of overall heating load from previous levels combined with Wednesday’s retreat of 21.6 cents by January futures to generate losses at most points.
The first net storage pull of the season was bigger than expected and sparked a sizeable futures increase but fell short of historical comparisons.
With bottom-end temperatures expected to be around the low 20s into the weekend, the high-usage Northeast market saw gains ranging from about a nickel to a little more than $1.35. Most of the largest losses from a little less than C20 cents to about half a dollar occurred in the West.
The Energy Information Administration easily surpassed consensus expectations centered around the mid 40s Bcf when it reported a 64 Bcf storage pull for the week ending Dec. 4. Though bearish in comparison with historical withdrawals, the premium to prior estimates allowed Nymex traders to push the January gas contract 40 cents higher (see related story), giving support to Friday’s cash market in addition to continuing major heating load.
“Winter doesn’t officially start for another week and a half, but you might have trouble convincing residents across much of the northern part of the country that it’s still fall,” The Weather Channel (TWC) commented. Although modest warming was due to continue in the Midwest, Midcontinent and much of the West, conditions would remain frigid for the most part.
“You don’t see storage facilities declaring force majeure very often, but lo and behold this one,” a Rockies producer said in reference to the withdrawal outage at CIG’s Totem facility (see Transportation Notes). He estimated a normal 200 MMcf/d withdrawal capacity for Totem and said the outage was “coming at the worst possible time because the weather out here has been very cold” with a Denver temperature of 15 below zero Tuesday night.
“I’d have to bet on it” that wellhead freeze-offs are occurring in the Big Piney gathering system behind Wyoming’s Opal Plant and probably in other parts of the Rockies, the producer continued. But such shut-ins are not especially significant for now because plenty of production is still going on, he said.
The producer noted that nominations system data indicated that about 1 Bcf/d had been withdrawn from Questar’s Clay Basin storage facility on Tuesday. He was surprised because he didn’t think Clay Basin was capable of more than 600 MMcf/d in takeout capacity.
“I’m sure we’ll see our plant volumes down tomorrow [Friday],” said an Oklahoma-based producer who said temperatures got down to about 10 degrees in his neighborhood Wednesday night. However, high readings should be back up to 55 around Sunday, he said.
Besides the storage pull report being above expectations, the producer said he thinks the futures market also was reacting to anticipation of another “big number next week,” probably more than 150 Bcf. “Things are getting interesting and should remain that way for the next few weeks,” he said.
It’s “blustery cold here today,” said a marketer in the Upper Midwest. It was 17 degrees at one point Thursday afternoon but felt like zero according to the wind chill factor, she said, adding, “All I know is it’s damn cold.” She thought the futures run-up Thursday would be able to revive cash prices Friday; after all, the 11- to 15-day forecast is still pretty cold for the Midwest, she said.
Kern River said linepack had returned to normal Thursday after being very low for the previous two days. But El Paso said it had set the probability of declaring a Strained Operating Condition to moderate due to low linepack.
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