It was not surprising when prices resumed climbing at nearly all points Friday following a partial interruption Thursday of last week’s overall cash market strength (see Daily GPI, Jan. 11). After all, cold fronts were moving into the South and Northeast Friday, and a new siege of frigid weather close to rivaling the one following New Year’s Day would be under way in most of the U.S. and Canada by the end of the weekend.
In addition, prior-day futures support had increased to a 16-cent gain by the February contract Thursday, and the cash market was responding to Thursday’s above-expectations report of a 171 Bcf storage withdrawal during the week ending Jan. 4. The decline of industrial load during a weekend had minimal impact.
Flat to nearly a dime lower numbers at some Rockies points were the exceptions to overall firmness. Otherwise, quotes were about a nickel to 30 cents higher, with Northeast citygates garnering most of the largest gains.
Rockies producers got the long-anticipated notice Friday morning from Rockies Express (REX) that with a few exceptions, REX-West interim firm service as far downstream as the ANR delivery point in Brown County, KS, was beginning Saturday (see related story). Back in November REX had hoped to begin such service as early as mid-December (see Daily GPI, Nov. 16, 2007), but construction delays made that unfeasible.
The pipeline continues to expect that full REX-West service to that segment’s terminus with Panhandle Eastern in Audrain County, MO, will become available in early February.
Obviously there was no immediate salutary effect on Rockies prices, as that market area was the weakest one Friday. And as a Midcontinent marketer pointed out, there’s unlikely to be much impact in the near term on Rockies-Midcontinent basis spreads because both regions are already near parity, with Rockies prices trading only 10-15 cents or so below the Midcontinent in several cases Friday.
Temperatures in the East were still above normal going into the weekend but would be close to seasonal in most areas by Monday, according to The Weather Channel. Snowfall would be increasing in the Midwest and Northeast early this week, it added but said it was unlikely to penetrate into parts of the South until late in the week. Meanwhile, the West would remain a tale of two climates: cold to very cold in the Rockies, Pacific Northwest and to some extent in inland California, but merely chilly in the desert Southwest and along the California coast.
In spite of the impending cold snap, MRT was the only pipe to issue an OFO-like constraint for early this week (see Transportation Notes), although Texas Eastern and Algonquin had earlier said they would be restricting creation of due-pipe imbalances and payback of due-shipper imbalances.
Daniel Guertin of Lehman Brothers noted that January had gotten off “to a very warm start for the vast majority of the United States.” But big changes are forecast for the second half of January, he said in a Friday advisory, “with very cold conditions expected for the Plains, Midwest and East. However, it is unlikely to get cold enough for long enough to completely erase the warm anomalies that have developed, and January 2008 should still end up on the warmer side of the 30-year [norm] for the United States as a whole.”
The number of drilling rigs actively seeking natural gas in the U.S. plunged by 41 to 1,409 in the week ending Jan. 11, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). The lion’s share of the decline occurred onshore, where 37 rigs quit the search, Baker Hughes said, while the Gulf of Mexico count fell by four. Its numbers represented drops of 5% from a month earlier and 2% from the year-ago level.
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