With the official start of spring only three days away, lack of heating demand softens market.
The official start of spring was only three days away, and with it feeling like the season had already arrived in most areas, it wasn’t especially surprising to see prices fall across the board Wednesday.
Losses ranged from about a nickel to 15 cents or so. No market area stood out as taking the biggest price hits, with declines of 10 cents or more prominent across the Gulf Coast, Midwest/Midcontinent, Northeast and West.
The cash market can again count on negative futures guidance Thursday as the prompt-month repeated Tuesday’s performance with another loss of 4.4 cents Wednesday despite strength in Nymex’s petroleum product offerings (see related story).
The general weather forecast was for flat to slightly higher temperatures in most areas. However, sources indicated that colder conditions would be returning going into the weekend.
The Northern Natural Gas bulletin board indicated the upcoming chill. Reporting a normal system-weighted temperature of 33 degrees for this time of year, the bulletin board projected averages of 44 Wednesday and 47 Thursday before a drop to around 36 Friday.
The Rockies market, where many points were down a dime or slightly more Wednesday, was “dead as a doornail,” a regional producer said. However, although fairly moderate temperatures were expected to continue Thursday, conditions were expected to be getting colder again toward the weekend, he said.
The producer noted that although the Niobrara play was producing a lot of oil and not much associated gas, “a lot of producers are going after it,” which might give a little residual boost for the gas market.
A Midwest utility buyer also said current weather in his area was “nice now,” but colder conditions were in store for the weekend.
Kyle Cooper of IAF Advisors is estimating a 22 Bcf withdrawal from storage for the week ending March 12.
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