Triple-digit gains at Northeast citygates led strong advances across the board in the cash market Monday as a siege of cold weather was established in nearly all of the U.S. and Canada and threatened to grow even more severe later in the week.
All of Monday’s upticks were in double digits as they ranged from a little more than 15 cents to about $2.75. The California and Western Canada markets tended to see the smallest increases.
Despite the great strength of Northeast quotes Monday, they came nowhere close to matching the spikes on the day after New Year’s Day that produced a high average of $39.41 at Iroquois Zone 2 and a peak quote of $52 at Transco’s Zone 6-New York City pool (see Daily GPI, Jan. 3). This time Iroquois had the top price of $12.75 and Transco Zone 6-NYC had the highest average of about $11.75.
After seeing a string of rising sessions end Friday, February futures will again have prior-day support for the cash market after rebounding by 14.3 cents Monday.
Although MRT’s lifting Tuesday of a System Protection Warning will leave no OFO-like constraints in effect, Transco’s imposition of bans on certain types of imbalance make-ups Tuesday (see Transportation Notes) joined those of Texas Eastern and Algonquin. And the Florida citygate soared by about a dollar and Florida Gas Zone 3 recorded one of the Gulf Coast’s biggest gains of about 60 cents as the pipeline warned of a potential Overage Alert Day due to cold weather coming into the Sunshine State.
Southern Natural Gas also was up about 60 cents as forecasts of sub-freezing lows Tuesday penetrated as far south as its market area. The pipeline is issuing OFO Type 3s for two of its delivery groups Tuesday (see Transportation Notes).
It’s cold in the West, too, and El Paso cautioned shippers of the potential for declaration of a Strained Operating Condition due to low linepack resulting from underperformance of some receipt points in the San Juan Basin area in combination with takes exceeding scheduled deliveries.
Even with frigid conditions already occupying nearly all areas outside the Southern California coast, even greater heating load should be arriving around midweek. Northern Natural Gas gave some idea of the potential demand in the Midwest. Noting that its normal system-weighted temperature at this time of year is 14 degrees, a bulletin board posting projected averages of 10 Monday rising to 19 Tuesday before plunging again to 11 Wednesday and an especially icy 5 Thursday.
The National Weather Service (NWS) sees below-normal temperatures occupying nearly all of the Lower 48 states by this weekend. In its six- to 10-day forecast posted Sunday, NWS predicted above-normal readings in the southern half of the Florida peninsula and normal ones in the peninsula’s northern half as the sole exception to below-normal temperatures everywhere else in the Jan. 19-23 period. The greatest deviations below normal will occur in the Midcontinent, Midwest, Upper Plains and along the Canadian border from Montana through northeast Washington state, the agency said.
A “lot of cold weather” summed up the market situation nicely, said a Houston-based marketer who added that “cold is the new four-letter word” to gas buyers. There was great anticipation Monday that things will turn much colder from Thursday through the weekend, he said, so it’s pretty safe to assume that higher prices will continue Tuesday and probably through the rest of the week.
The marketer noted that the cold snap was having little effect on a “routine” transport situation because no OFOs were around. He reported hearing that Tennessee had lost a lot of linepack last week, “but I think they’ve built it back up by now.”
There’s a bunch “of unhappy folks around here today” after the Cowboys football team’s playoff loss Sunday, a trader in Dallas said. An arctic front is about to move into North Texas, she added, but it hadn’t arrived yet as of mid-afternoon Monday. She agreed with the marketer that it looks like a weeklong run of cash price firmness with even colder weather coming along around Thursday. Demand was “very strong” Monday with her office getting a much heavier than usual amount of calls from buyers.
Both sources also agreed that it looks as if the main impact of Rockies Express-West starting service Saturday as far as the ANR delivery point in Kansas (see related story) on Rockies market basis will come after the winter season ends and localized heating demand dies down. Rockies points continued to trade at only small discounts to the Midcontinent Monday and tended to reflect the overall market’s price strength.
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