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OFOs, Freezing Weather Keep Prices Marching Higher
It wasn’t difficult to understand why spot prices were going upsharply again Monday when one considers that several new pipelineOFOs related to colder weather joined ongoing OFOs or other systemconstraints (see Transportation Notes). Freezing conditions weresettling into much of the nation’s midsection Monday, with winterstorms expected to penetrate even the Deep South by today. Thepredictable result of such a frigid onslaught was heavy heatingdemand for gas that sent prices higher by about a dime or more onmost pipes. Some points, such as Chicago and Northeast citygatesalong with Upper Midwest deliveries by Northern Natural Gas (demarcand Ventura), achieved gains in excess of 20 cents.
Although an eastward-moving arctic front had not reached theEast Coast yet, Northeast citygates were solidly at $3 and above inanticipation.
The few points with increases substantially less than a dimewere concentrated on the West Coast, where California and PacificNorthwest weather was considerably warmer than that from theRockies eastward. A marketer said that relative warmth should reachthe Rockies late this week, with high temperatures reaching the 50sThursday and Friday.
The latest National Weather Service six- to 10-day forecastreleased Monday afternoon appears to have above-normal andmuch-above-normal temperatures predicted for wider areas next weekthan in recent forecasts. However, many of those areas arerelatively sparsely populated. Meanwhile, the region targeted forbelow-normal and much-below-normal reading essentially is from theMississippi River eastward, or the most densely populated sectionof the U.S.
Cash started off strongly Monday but was coming off in latedeals, several sources said. Henry Hub numbers began shrinking asmore and more sellers emerged there as the morning wore on, amarketer said. And a Gulf Coast producer said its TexasEastern-West Louisiana sale at $2.65 was above its East Louisianapool deal at $2.61, reversing the normal basis relationship, purelybecause the West LA gas was traded early and the East LA sale wasdone late after prices had begun retreating.
A marketer said Williams and OGT numbers tended to lead theMidcontinent pack slightly because of heavy buying by OklahomaLDCs. Tulsa’s high won’t get above the 20s today, he said, whilethe low should be in the low to mid teens.
Even though a producer saw only a 0.25-cent difference betweenbuyers and sellers in a lot of early January price sparring,”neither are budging” despite the gap being so small, he said.Citing nasty weather in Houston Monday (“it’s damp and overcast,with people walking around in coats”), he thought that might bejust the thing needed to “remind traders that it’s December.”
Bidweek numbers seem to be very illiquid, having changed littlefrom last Thursday. He was seeing the Chicago citygate trade atindex flat to plus 0.75 and reported Midcontinent field deals atindex flat to plus 0.5.
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