A few flat to about a nickel higher points in the Rockies, where Wednesday lows were due to sink into the teens, were the exceptions to price dips throughout the rest of the market Tuesday. A futures decline of 9.7 cents a day earlier contributed to the bearishness along with analyst reports of early February forecasts indicating that the weather would not be quite as cold as previously expected.
Although much of the Midwest could also expect bottom-end temperatures in the teens and even down to about six in Chicago, quotes in that market did not escape the general downturn ranging from 2-3 cents to about a quarter. Numbers tended to take the biggest hits in the Gulf Coast, Midwest and Northeast.
Prompt-month futures ended their next-to-last day of trading with further negative guidance for the Wednesday cash market, falling 23.7 cents (see related story).
Next-day lows in the South were predicted to stay comfortably above freezing, and the Northeast was not expected to get very far below that level. Although frigid conditions due in the Rockies tended to support that market to some extent, the same was not true of a similar forecast for the Midwest.
IntercontinentalExchange (ICE) reported that 129,500 MMBtu/d was nominated in 19 transactions on its system at the Clarington, OH, terminus of Rockies Express for Wednesday since the pipeline said it was lifting the force majeure in that area and allowing limited deliveries (see Transportation Notes).
ICE also noted its volumes at Transco Zone 6-New York, where prices fell about 20 cents, shrinking from 206,300 MMBtu Monday to 131,3000 MMBtu Tuesday.
As if going to average system-weighted temperatures of eight degrees Tuesday and Wednesday (the norm is 16 at this time of year) wasn’t cold enough, Northern Natural Gas projected that the averages for Thursday and Friday will be zero and minus one.
Saying linepack had gone significantly above its maximum target level over the previous couple of days, Kern River reported Tuesday that linepack remained high “and hasn’t moved much from yesterday [Monday].” The pipeline said it expected all shippers and operators to make arrangements to take payback of gas owed by Kern River.
Southern Natural Gas again reflected a much-increased recent rate of storage withdrawals. As of last Thursday its working gas inventory stood at 38.7 Bcf, or 65% of total capacity of 60 Bcf, the pipeline said. That compared with 44.2 Bcf (74%) on Jan. 22, 2009 and 41.8 Bcf (70%) on Jan. 24, 2008, the pipeline said.
A Texas-based marketer said he thought prices will continue to fall “a little bit” in general over the next week or so, although a couple of meek rallies might be in store. There should be more supply coming in from LNG imports in February, and there’s still lots of storage inventory to work off, he said. He didn’t expect the LNG to be in high demand because of generally warmer weather over the next few weeks.
The marketer attributed a big dive in February Chicago citygates to the low $5.70s Tuesday to the futures dive. That was down from the prevailing mid $6.00s Monday, he said. He reported seeing basis Tuesday of plus 6.5 cents for Florida Gas Zone 3, plus 19.5 cents for MichCon citygates and plus $1.08 for Texas Eastern M-3.
Despite Tuesday’s price drops indicating expectations of moderating weather, the National Weather Service’s (NWS) six- to 10-day forecast for the Feb. 1-5 workweek calls for below-normal temperatures in a large majority of the U.S. Excluding normal conditions in the upper Northeast, the lower half of the Florida peninsula and the northern reaches of the Midwest along with most of the Dakotas, NWS expects below-normal readings extending from most of the East Coast into most of Nevada and the eastern edge of California. It called for above-normal temperatures only in Washington state along with the northern ends of Oregon and Idaho.
Stephen Smith of Stephen Smith Energy Associates is projecting an 88 Bcf storage draw for the week ending Jan. 22, which he said was up from an original estimate of 97 Bcf. Ron Denhardt of Strategic Energy & Economic Research is looking for a significantly higher pull of 105 Bcf.
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