As sources expected, prices were mostly higher Friday in the East, where frigid weather would be occupying northern market areas during the weekend and more moderate but still cold conditions were expected in the Midcontinent and South. Also as expected, a generally moderate West outside the mountain areas saw mostly softer quotes.
Most of the cash market was able to shrug off Thursday’s futures weakness and the usual weekend drop of industrial load to range from flat to a little more than $5.50 higher. As they had been doing all week, Northeast citygates measured price movement in triple-digit amounts. Only Transco Zone 6’s New York pool and Iroquois Zone 2 averaged in a marketer’s predicted Northeast range of $10-14, although all of the delivery points saw top quotes of $10-15. The New York and Iroquois points recorded the top numbers.
Minority losses of 2-3 cents to about 75 cents occurred primarily in the Texas section of the Gulf Coast and much of the West.
The Energy Information Administration was in line with consensus expectations Friday when it reported that 176 Bcf was withdrawn from storage during the week ending Jan. 16. The report was delayed by one day from its usual Thursday morning release because of the Monday holiday and the presidential inauguration Tuesday. Despite the essentially market-neutral nature of the report, Nymex traders extended Thursday’s February futures loss Friday, pushing the contract 16.3 cents lower on the day.
The Midwest was already seeing lows below zero and in the single digits at many locations Friday, and such conditions were forecast to last through Monday. The Northeast was a bit milder than that but could expect Saturday lows in the teens and low 20s, with Buffalo and Albany in New York forecast to bottom out around five degrees and zero, respectively.
Most of the South was still fairly mild through Friday but was due to experience a weekend cooling trend. Lows below freezing would be common in the eastern half of the region, but west of the Mississippi River and Florida weren’t expected to get below the 40s.
It was a “same old same old” forecast for the West: very cold in most of the mountainous sections but chilly to moderate in the rest of the region.
Eastern pipelines continued to add to the restrictions caused by cold weather previously announced, while other OFO-like measures were being extended (see Transportation Notes).
Besides mostly seasonal weather, some western markets were under pressure from excess supply issues. Southwest Gas issued a Stage 3 OFO due to banking on its system and high linepack on upstream pipes, and Kern River reported high linepack systemwide (see Transportation Notes). And SoCalGas extended a high-linepack OFO into at least its third day Saturday.
In spite of the OFO continuing, Friday’s drops of about a dime at both the SoCal citygate and Southern California border were considerably smaller than the declines of slightly more than a half dollar on Thursday.
There didn’t seem to be that much extra demand in northern market areas Friday than earlier in the week, a Gulf Coast producer said. He thought storage withdrawals were continuing to displace spot gas purchases to a large extent, but the weekend heating load had grown so large that storage use had to be supplemented more in the daily market than before, which resulted in Friday’s price increases. After all, storage customers have maximum daily limits on how much they can take out of their accounts, he noted.
The producer also said that although the East was turning frigid in many areas, overall its heating load was not as great as on Thursday of the preceding week because now the South was seeing more moderate conditions than then. His company was not having any problems with the proliferating pipeline constraints, he added.
The producer was getting some early bidweek trading done, reporting a basis sale Friday at Transco Station 45 of minus 6.5 cents. He also did a “much weaker” Texas Eastern-South Texas deal at basis of minus 58 cents, and said he was hearing later that day that the point had slipped to minus 59 cents. He expects Monday to be a “big day” for February business.
A Gulf Coast marketer also said she didn’t notice any especially big jump in demand Friday, saying it stayed pretty much the same day to day for her company unless some extra-harsh winter weather occurred for a few days. She noted that Gulf Coast spot gas was trading at dollar-plus deficits to first-of-month indexes. She expected falling prices Monday due to futures weakness Friday and above-normal temperatures due in most of the East by midweek.
The marketer also was doing some early February business, saying that since her company indexes all baseload at the request of its producer clients, those kind of deals usually gets done earlier than other bidweek deals at fixed prices or basis. She said NGPL-TexOk had weakened to index minus 2 cents, while most of the other deals were going for index flat or close to flat.
A Midwest marketer reported having to buy more gas than usual for the company’s clients due to Midwest lows going into single digits. She was very much looking forward to thawing out around the middle of this week. Michigan Gas Utility had lifted the previous week’s OFO, but another OFO would begin Saturday, she said.
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