Northeast citygates skyrocketed Wednesday to as high as $23.50 at Transco Zone 6’s New York City pool in response to the approach of a major winter storm. The spikes in that region easily outpaced gains at nearly all other points as icy conditions continued to ravage the nation’s midsection and much of the previously balmy South prepared to get a return taste of winter Thursday.
A change in now-Tropical Depression Olga’s expected path provided further impetus for the market’s upward momentum.
A few scattered flat to about a nickel lower quotes were the exceptions to overall upticks ranging from a little less than a nickel to nearly $7.60. Outside the Northeast increases were fairly modest in being capped at around 30 cents..
Although Transco Zone 6-NYC claimed the day’s top price, it was exceeded on average by the Algonquin citygate, Iroquois Zone 2 and Tennessee Zone 6, all of which serve the New England market. New England lows for Thursday are expected to be in the low to mid 20s. The Algonquin citygate climbed to more than $17.80.
Winter storm watches and heavy snow warnings are posted for Thursday from northeastern Pennsylvania through southern New England. The eastern end of the South will get another day of relative warmth, with Atlanta expecting a high of 73 Thursday. But a cold front was already moving into Texas Wednesday and would continue eastward, dragging temperatures lower in the western South.
Lows around freezing or less will continue in the Rockies and Pacific Northwest, and inland California is expected to bottom out in the 30s.
In anticipation of the demand surge in the Northeast, Tennessee had a an OFO Balancing Alert in effect in Zones 5 and 6 on its 200 Line, and Spectra pipes Texas Eastern and Algonquin were warning shippers against creating due-pipeline imbalances.
Subtropical Storm Olga had seemed a nonthreat to Gulf of Mexico production Tuesday while traversing the island of Hispaniola (Dominican Republic and Haiti), but grew in significance Wednesday. It not only survived the overland trip but was upgraded to a tropical storm before being reclassified as a tropical depression Wednesday afternoon. And the National Hurricane Center’s five-day “cone” of projected tracking, which as of Tuesday had Olga moving due west through Friday, now predicts a gradual curve towards the west-northwest. That would take the storm to the northern tip of Mexico’s Yucatan Peninsula around Saturday morning, with the open Gulf lying beyond.
Besides weather fundamentals, the cash market will have extra support Thursday from a 32.3-cent jump in January natural gas futures Wednesday. The gas screen’s spike was overshadowed, though, by the fireworks of January crude oil soaring $4.37 to $94.39/bbl on news of a fourth straight weekly drop in crude inventories.
As cold as it is already in the Midwest, even lower temperatures are on the way. Northern Natural Gas, saying its normal system weighted temperature at this time of year is 21 degrees, expected the average to be 18 Wednesday and Thursday before dropping to eight Friday and rebounding to 13 Saturday.
“Cold weather nearly everywhere” was how a Texas-based marketer summed up Wednesday’s market. It was purely supply and demand driving the Northeast spikes, he said, dismissing any “storm hype.” He expects prices to stay firm through Friday because it will stay very cold in northern market areas until next week. His company was seeing no significant transport problems except at Tennessee’s Station 249 in Carlisle, NY.
A utility buyer in the South recalled his area being hit by a severe ice storm in 1994, so it could sympathize with the Midcontinent situation, he said. Local weather was merely cool Wednesday, he added, but it will get “real cold” this weekend. The utility currently is ahead of last year’s storage withdrawal pace because of a chilly November, but has no concern about running out of storage, he said.
There was a company strategy meeting Wednesday, the buyer said, and “we’re always looking at the difference between where we’re hedged and where current market prices are.” Right now they match up pretty well, he said, “so we think we’re in good shape.”
There was snow on the ground Wednesday but the skies were sunny, which was a relief, a marketer in the Upper Midwest said. She reported buying in the low $7.40s at the Michigan citygates, saying her company was grateful not to be paying Northeast-type prices.
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