With weather due to keep getting colder in key market areas as the week wears on and having added support from a 19.4-cent futures increase a day earlier, cash prices continued to rise Tuesday at a majority of points. However, the gains were considerably smaller than those on Monday in nearly all cases, and quite a few points in the West and Midcontinent (along with one in the Gulf Coast) ranged from flat to about a dime lower.
A few locations in the West joined most of the East in recording gains ranging from a couple of cents to nearly 35 cents. Northeast citygates were the clear leaders in seeing the biggest upticks. However, almost all of the points still trading below first-of-the-month indexes are in the Northeast.
Scattered snow flurries and showers from northwestern Pennsylvania into northern New England will help produce Northeast high temperatures Wednesday that will be close to mid-January norms in the 20s and 30s, according to The Weather Channel (TWC). Conditions should be milder than that in the South and Midwest, but they also will be feeling the chill of a polar air mass moving south out of Canada before the weekend gets here.
Another snow-bearing storm will be moving eastward through the Pacific Northwest Wednesday and is expected to continue through much of the U.S., reinforcing late-week frigidity. In fact, “by this time next week, virtually all of the Lower 48 states will be in the grip of polar air,” TWC said Tuesday.
Supply limits in the West were easing to a small degree. Kern River, which had reported low linepack in most of its system Monday, said linepack returned to normal systemwide Tuesday.
Southern Natural Gas is characteristic of how slow the withdrawal process is going for some storage operators as the midpoint of the November-March winter heating season approaches. With 60.0 Bcf of total working gas capacity at its two fields, the pipeline reported Tuesday that as of Jan. 4 its inventory stood at 45.8 Bcf, or 91% of capacity. Comparable past levels were 42.9 Bcf (72%) on Jan. 5, 2006 and 44.7 Bcf (75%) on Jan. 6, 2005, Southern said.
A Northeast marketer said the upward ascent of prices in his area slowed Tuesday at least partly because of a “wait-and-see attitude” by traders on just how cold the weather will actually get. He said it was hard to get a good feel on whether people are starting to draw more heavily on their storage accounts. After all, he noted, if they’re using a lot of storage, they weren’t going to call on him for more supplies.
Northeast weather will be “a little choppy” over the next week and a half, the marketer said. Following the midweek cold, there should be some moderation over the weekend into early next week, and then it’s likely to get much colder again late next week, he added.
Between the ongoing rise in heating load and Tuesday’s futures strength (the February contract added another 25.3 cents), it’s a good bet that cash quotes will keep going up Wednesday, he said.
It’s pretty chilly now, said a Lower Midwest utility buyer, but the “real cold” in the teens will arrive over the weekend when an air mass dispatched from Canada arrives. Her company was gearing up for the cold by making more purchases in the spot market than before, she said, adding that the much lower temperatures will help it meet specified reductions in its storage accounts more easily.
They will help the utility’s bottom line, too, the buyer continued. In December its sales throughput volumes were 25% less than normal, she said.
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