Low temperatures sinking into the teens, single digits and even below zero Thursday in areas from the Northeast through the Midcontinent/Midwest, Upper Plains, Canada and parts of the Rockies failed to faze either the cash or futures markets Wednesday. Softness remained the order of the day. Physical prices fell at all but three points as conditions were due to stay relatively moderate across the southern tier of states and in much of the western U.S. outside the Rockies.
The previous day’s screen dive of 23.7 cents and expectations of a much lower storage withdrawal report than in the previous couple of weeks also had depressant effects on cash quotes.
Flat numbers at the New England points of Dracut and the Algonquin citygate, along with Texas Eastern M-2, were the sole exceptions to declines ranging from a little less than a nickel to a little more than 20 cents. The Houston Ship Channel, where temperatures would stay merely cool through Thursday before getting chillier from Friday into the weekend, recorded one of the largest declines.
Because of Feb. 1 occurring on Monday, Thursday’s spot trading will be for Friday-Sunday flows, while Friday deals will be for Monday only.
February futures ended their prompt-month reign on a down note, falling another 21.1 cents to go off the board at $5.274 amid weakness throughout Nymex’s energy complex (see related story).
Some northern reaches of the South will be turning significantly colder Thursday as a winter storm begins to reach them, but much of the region will continue to see seasonal to relatively moderate conditions for a day or two longer. Meanwhile, most of the northern half of the U.S. along with Canada will experience fairly harsh cold, but sources indicated that heavier use of storage likely was behind the market failing to acknowledge the increases of heating load.
Production-area and citygate prices dropped on Florida Gas Transmission despite the pipeline cautioning that with lows in the 30s and 40s having moved into Florida, it may have to issue an Overage Alert Day on an upcoming gas day.
Despite the fact that Rockies Express reopened five Clarington, OH delivery points Wednesday to 88% service following a Nov. 14 force majeure and that appearing to help firm a few Rockies prices modestly Tuesday, the pipeline reported ample available capacity Wednesday in all segments where customers have contracted for space (https://pipeline.kindermorgan.com/infoposting/segment.aspx).
Kern River said scheduled volumes were shrinking rapidly at all three upstream compressor stations (Muddy Creek, Coyote Creek and Veyo) and especially at the Wheeler Ridge delivery point into SoCalGas, where scheduled flows plunged from 332,474 Dth/d (Intraday 2) Tuesday to 175,757 Dth/d (Evening) Wednesday. Flows at Kramer Junction into SoCalGas stayed fairly steady at nearly 123,000 Dth/d both days, Kern River said, but that still left more than 407,000 Dth/d available at the point.
“Natural gas prices are melting as medium- and longer-term temperature forecasts show a largely neutral outlook progressing to warmer than normal during the 11- to 15-day outlook,” Barclays Capital analysts said. “This is not the start to February for which gas bulls were hoping.”
Local weather was getting colder with some frozen precipitation likely in the next couple of days, a utility buyer in the South said. However, his company had caught up again on desired storage levels since the major cold snap ending in mid-January, so it expects to lean on storage a little more heavily in lieu of buying new spot supplies, he said. Besides, he added, the new cold spell should be a lot more “manageable” than the last one, when the utility found it necessary to curtail some customers at times.
The extra load forecast for early January prompted the company to buy baseload gas then, the buyer said, but it was not making any February purchases, expecting to get by on winter term deals and storage.
A western trader said the West Coast was seeing a “lot of rain, but snow only in the mountains.” He agreed with the Southern buyer that even with colder temperatures returning in many areas, it was probably more storage use that accounted for both cash and futures softness Wednesday.
The trader said he also planned no baseload purchases for February. Bidweek numbers dropped further to the mid $5.60s at the PG&E citygate Wednesday in sympathy with futures weakness after having averaged in the mid $5.80s a day earlier on IntercontinentalExchange (ICE), he said.
ICE indicated that February bidweek prices fell by anywhere from about a dime to 30 cents or so from Monday to Tuesday in deals done through its on-line system. The Chicago citygate recorded one of the biggest drops, ICE said, going from an average of $6.06 Monday to the low $5.70s Tuesday. Traded volumes also fell off a lot, with a total of 183,200 MMBtu on Monday shrinking to 77,000 MMBtu Tuesday.
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