As one source had expected (see Daily GPI, March 4), the combination of Wednesday’s screen dive and generally mild weather forecasts resulted in spot market weakness Thursday. All points were close to united in recording drops from a dime to about a quarter; most were in the mid to upper teens.

However, another trader’s prediction of a below-expectations storage pull being reported Thursday, followed by a major Nymex sell-off that would force cash even lower Friday (see Daily GPI, March 3), was looking a bit questionable. He did make correct calls on the report from the Energy Information Administration, whose estimate of a 96 Bcf withdrawal for the week ending Feb. 27 was at the low end of the range of most prior guesses, and the screen softening after the report came out.

But much like on Monday, a surge by crude oil was the tide that lifted all boats in the Nymex energy group Friday. Crude oil’s rise of 86 cents to $36.64/bbl was accompanied by gains in heating oil, propane and unleaded gasoline (New York Harbor). Supply concerns prompted by continued political tensions in Venezuela and the worry that OPEC will cut production levels in the near future were said to have propelled oil, and natural gas for April rebounded to the tune of an eventual daily gain of 8.2 cents.

“We’re cattle” in the gas industry by letting oil dictate its futures movement lately, said a trader in the intrastate Texas market. He reflected the consensus of several sources in saying there’s “no telling what will happen Friday, with the futures rally as an influence arrayed against expectations of modest heating demand and a weekend’s usual industrial load drop. He did comment that for the last couple of weeks, “anybody with available storage space” has been playing cash-screen spreads and injecting, especially in Texas. That’s tended to partially offset the withdrawals, or otherwise EIA would have been reporting bigger draws, the trader said.

Despite Thursday’s all-around softness, the market wasn’t totally devoid of demand-boosting cold weather. The Rockies and Upper Plains are still registering sub-freezing daily low temperatures accompanied by some snow, and a central Plains source confirmed that temps would be falling into the 20s Friday. A cold front is starting to move eastward into the South, according to The Weather Channel, and parts of the Midwest and Northeast could expect moderate cold fronts over the weekend. It also noted a Pacific Northwest storm likely to dump another foot or two of snow on Washington state’s Cascades Mountains and the northern Rockies this weekend.

Northern Natural Gas sees a moderate cooling trend for its service area, projecting that the system weighted temperature would fall from 34 degrees Thursday to 27 degrees Sunday. However, that would still be slightly above its normal average of 26 degrees for this time of year.

But a Midwestern marketer resisted any bullish thinking. It’s still relatively warm in Michigan, she said, and forecasters were even talking about Detroit-area highs near 60 Friday, albeit with “lots of rain.” Almost no snow is left in her area other than residual slush piles, the marketer added. She could see nothing to explain the screen gain other than “following the oil.”

The marketer went on to say that she hadn’t bought any March baseload, thinking that the aftermarket would be weak. That wasn’t quite happening with Michigan citygates as of Thursday, though; Consumers Energy was approximately flat to index and MichCon was nearly a dime above index. The citygates would have been below index by now if it hadn’t been for Tuesday’s jumps of about 20 cents or so, she thought.

A western utility buyer was ambivalent, saying, “Most of the gains from the day before were simply yanked away. Will the roller-coaster take us back up 20 cents higher Friday? Ah, it will probably be flat again.”

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