What had already been a fairly strong cash market this week got even stronger Wednesday as prices increased at all points. Tuesday’s futures gain of 8.8 cents added a bit of extra support to an ongoing shift from relatively mild weather in most of the East to heating load-boosting temperatures.
Northeast citygates recorded most of the largest upticks, which overall ranged from about a dime to 55 cents. The smallest advances were concentrated in the West despite Rockies forecasts of lows in the upper teens Thursday.
In its six- to 10-day forecast posted last week for the Jan. 7-11 workweek (see Daily GPI, Jan. 3), the National Weather Service (NWS) had predicted above-normal temperatures everywhere in the U.S. from the Rockies through the East Coast. That might have suggested to many that the market would be mostly softer this week. But so far prices were mostly higher Monday, up at nearly all points Tuesday, and gains were scored across the board Wednesday.
The NWS forecast wasn’t wrong, according to AccuWeather.com. After a number of daily high temperature records were surpassed Tuesday at such locations as Baltimore, Boston, Providence, RI, New York City and Bangor, ME, a cold front had moved into the Northeast Wednesday after earlier chilling out the Midwest and Plains. But the lower temperatures are still above normal for early January, AccuWeather.com said.
SunTrust Robinson Humphrey/the Gerdes Group agrees. “Cooler, though still above-normal temperatures are expected over the next several days,” the consulting firm said in its Wednesday morning advisory. “More importantly, weather forecasters are keeping an eye on a potential southern shift in the jet stream this weekend, which could bring a return to cold conditions, particularly in the gas heating-intensive Midwest and Northeast regions.”
Screen support for the next-day cash market got even stronger Wednesday, with February futures up by 13.2 cents based largely on expectations of a heavy storage withdrawal being reported Thursday for the week ending Jan. 4 (see related story).
Although there are virtually no significant transportation constraints, El Paso indicated the effect that cold western weather has had on its system by saying that the probability of its declaring a Strained Operating Condition or Critical Operating Condition due to low linepack had been set to moderate Wednesday.
Referring to the NWS prediction of above-normal temperatures in the eastern two-thirds of the U.S. this week, a western source said several forecasts had gotten colder toward the end of last week. His company’s forecasting service indicated that temperatures are indeed above normal in the East, but apparently when approaching mid-January that can still mean a substantial amount of heating load, especially in the North, he noted.
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