No points were left untouched Thursday as overall cash prices tumbled on average 13 cents. The Northeast suffered not only from a moderate weather outlook but also the arrival of copious quantities of liquefied natural gas (LNG) that entered the market.
Eastern points along with Texas also suffered declines. The Energy Information Administration (EIA) reported a build of 2 Bcf in its weekly storage report, well ahead of industry estimates of about 10 Bcf less, but prices posted only a nominal decline. At the closing bell January had fallen 3.5 cents to $3.347 and February had skidded 2.3 cents to $3.389. January crude oil fell 88 cents to $85.89/bbl.
Northeast marketers were scratching their heads at the day’s declines on major market points. “You would assume the same amount of people, and now we have the same number of heating degree days and prices are $4 less,” said a New England trader.
“The market is pretty soft everywhere, and Repsol has been moving big LNG volumes from its Canaport facility. Where it was moving 150,000 Dth/d it is now moving up to 400,000 Dth/d for the last couple of days, and I think they were moving 300,000 Dth/d today [Thursday]. They are moving a lot more gas in. All the downstream points such as Algonquin got hit pretty hard. They have another cargo coming in and they had to make room.”
Near-term weather forecasts were also not price-supportive. The National Weather Service in southeast Massachusetts said, “high pressure holds across New England through the early part of the weekend with dry weather and seasonable temperatures. Active weather [is] expected Sunday through the middle of next week…with bouts of rain and/or snow. There is the potential for a strong coastal storm by next Tuesday and Wednesday…but confidence remains low.”
Accuweather.com reported Boston’s high Thursday of 42 was expected to rise to 48 on Friday and ease to 43 by Monday. The normal high in Boston is 42. New York City’s high of 45 Thursday was anticipated to reach 50 by Friday but slide to 48 by Monday. The seasonal high in New York is 44.
Next-day gas at Algonquin Citygate fell a stout $1.55 to average $4.26, and deliveries to Tennessee Zone 6 200 L dropped $1.30 to $4.09. Gas at Iroquois Waddington was quoted at $4.12, down 39 cents.
Farther south, next-day quotes also eased. On Dominion Friday gas averaged $3.23 or 7 cents lower, and at Tetco M-3 buyers enjoyed gas about 12 cents less at $3.50. Deliveries on Transco Zone 6 New York came in at $3.67, or down 45 cents.
Texas points suffered losses ranging from about a nickel to a dime. Gas on Transco Zone 1 for delivery Friday fell 7 cents to $3.21, and at Katy next-day parcels were quoted 6 cents lower at $3.20. Gas at Carthage was 6 cents lower at $3.21, and on NGPL TX OK gas for Friday delivery was 7 cents lower at $3.20. Gas flowing on El Paso Permian tumbled 11 cents to $3.14.
Futures traders reported no additional price movement following the EIA inventory report. “We still held the $3.293 low, but volume was very heavy. We also traded some calendar 2013 at $3.505 and $3.52, about 4 and a half to 5 cents lower, ” said a New York floor trader.
There was little change on the weather front in morning forecasts, and January Globex volume registered a stout 223,000 contracts, well above the 100,000-plus of a typical trading day. “Weather forecasts are little changed from [Wednesday], with above- to well-above-normal temperatures expected across the East in the next five days, followed by a slight shift cooler in the South. Normal to above-normal temperatures are expected for the Midwest and Northeast at the tail end of this month and the early part of January,” said Addison Armstrong of Tradition Energy.
In an extended forecast, Wunderground.com predicted that the high in Boston a week from now would be 45, 3 degrees above normal. New York was expected to see a high of 50, well above its normal high of 44, and Chicago came in at a high of 41, a hefty 5 degrees above its seasonal norm.
Traders Thursday morning got a surprise in the form of an unexpected inventory build reported by the EIA in its 10:30 a.m. storage report. Expectations ranged from a small draw to a small build, much larger than the withdrawal last year of 79 Bcf and the five-year average decline of 113 Bcf.
Ritterbusch and Associates calculated an 8 Bcf pull, and industry consultant Bentek Energy forecast a 3 Bcf withdrawal. A Reuters survey of 26 traders and analysts revealed an average 4 Bcf decline with a range from a pull of 15 Bcf to a build of 7 Bcf.
Surveyors were correct to be pessimistic that despite their best efforts at estimating storage, something was likely to go awry. “It’s gonna be a show-stopper this week, folks; we can feel it,” said John Sodergreen, editor of Energy Metro Desk before the report was released. “The range of forecasts is fairly wide: plus 7 to minus 10 Bcf. Last Friday’s Early view was even wider: plus 2 to minus 22 Bcf. This week always seems to give the market a bit of trouble, though.”
Sodergreen follows three categories of storage analysts, independents, banks and surveys, and whenever the range among the categories shows a wide difference, surprises are likely in the storage report. “The range between forecast categories this week was a whopping 4.2, further pointing to a surprise this week. Our consensus this week came in at minus 2 Bcf and the median was minus 3 Bcf, well below the other surveys. Lots of confusion out there this week.”
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