Despite a little prior-day screen support, the cash market finally had to acknowledge Wednesday that it wasn’t getting enough weather-based demand to sustain the moderate rally of the first two days of the week. A few flat to nearly a nickel higher quotes were overwhelmed by softening everywhere else.
A large majority of locations recorded losses ranging from 2-3 cents to about a quarter. Declines were fairly consistent across geographic market areas, with most limited to single digits.
The April futures gain of 5.1 cents Tuesday did essentially nothing to boost cash numbers Wednesday, so it’s unlikely that Wednesday’s screen drop of 2.5 cents (see related story) will have any positive effect on the physical market Thursday.
A few sections of the upper South will be getting cooler again Thursday, but most of the region can expect pleasant early-spring highs in the low to mid 70s to continue. Little change is expected in the Midwest and Northeast, with lows on either side of the freezing level remaining the norm, but relatively moderate daytime highs in the 50s should keep heating demand fairly light.
Sub-freezing lows are still in the forecast for the Rockies and much of Canada, but those will be the last bastions of substantial heating load going into the weekend. The rest of the West will range from cool to somewhat warm (in parts of the desert Southwest).
The PG&E citygate managed to rise Tuesday while a high-inventory OFO was set for Wednesday, but it fell a couple of cents or so Wednesday even after the OFO had been canceled. Even though SoCalGas extended a high-linepack OFO through Thursday, the SoCal citygate and Southern California border were flat and down about a nickel, respectively.
It’s the “season of oscillation,” a utility buyer in the South said creatively in describing the varying trends of hotter or colder temperatures his area could expect through the end of the month. Local residents have lowered their thermostats but not completely shut off their furnaces because of overnight lows still dipping into the 40s on occasion, he said.
The temperature pattern looks mixed up and down through the end of March, the buyer said. For that reason he expects the company to be “kind of flat” between storage injections and withdrawals over the next 10 days; that is, putting in gas on warmer days and taking it out when it gets colder cold again.
April is very much a shoulder month in his area, so the buyer doesn’t anticipate much need for immediate-burn supplies; however, he plans to buy 20-40 MMcf/d of baseload during bidweek as the utility begins its usual storage injection schedule.
A Rockies producer said the impending outage of CIG’s Cheyenne Plains Jumper Compressor Station (see Transportation Notes) was not much of a problem for the regional market. However, the two-week outage of Questar’s Clay Basin storage facility starting April 1 will be much more troublesome, he said, since it will force an estimated 600 MMcf/d that can’t be injected out into the market.
The Rockies market is still fairly comfortable, he said, noting that CIG basis was only about a quarter below Henry Hub Wednesday. But the main problem, he continued, is that “we’ve got to have these shale rigs laid down.” He thinks a lot of the producers in the shale plays are only kidding themselves when they say they can profit on $5 gas (of course, $5 gas is only a distant memory for the spot market).
The National Weather Service (NWS) predicts above-normal temperatures during the March 29-April 2 everywhere between lines running southward from western Montana through western Arizona and arcing to the south-southwest from Michigan’s Upper Peninsula through East Texas. Its six- to 10-day forecast posted Tuesday afternoon called for below-normal readings everywhere east of a line curving northeastward from southeast Louisiana into the southeastern half of Ohio and the southwestern half of Pennsylvania. NWS also expects below-normal temperatures in all of Washington state and Oregon along with northwestern Nevada and the northern two-thirds of California.
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