Although most of the U.S. is expected to experience normal to above-normal temperatures this week, there was enough heating load in the forecasts for Christmas Day into the weekend to generate moderate increases at a majority of points Wednesday. There was also substantial support for the cash market from the previous day’s 44.3-cent spike by January futures, while the normally extra-bearish influence of a long holiday weekend apparently had minimal impact.
Most of the losses of a couple of pennies to about a quarter were in the Northeast, Midcontinent/Midwest and Gulf Coast. The West was almost solidly higher among the points that ranged from flat to up about a half a dollar.
Because of the Christmas holiday Thursday and virtually all of the industry other than Nymex taking Friday off as well, Wednesday’s cash deals were for gas flows through Monday.
The Energy Information Administration’s report of a 147 Bcf storage injection during the week ending Dec. 19 exceeded consensus expectations in the mid to upper 130s Bcf. January futures had been in negative territory all morning prior to the noon EST release of the report (pushed up to Wednesday because of the holiday), but Nymex traders clearly saw a bullish signal as they pushed the contract to a gain of 17.3 cents on the day (see related story).
Florida Gas Transmission and Northern Natural Gas relaxed cold weather-related restrictions (see Transportation Notes).
It surprised at least one source that cash price weakness Monday and Tuesday had largely been predicated on predictions of generally moderating weather later in the week, but he acknowledged that there appeared to be a few blasts of arctic cold still hanging around during the holiday weekend.
This was especially so in the Midwest, where several locations that had been flirting with temperatures slightly above the freezing level Wednesday were destined to return to the teens and 20s Thursday. The Chicago citygate softened in spite of a predicted high in the mid 20s. However, the Midwest forecast was mixed again as temperatures were expected to rise Thursday in some sections.
The Northeast was still expected to see Christmas lows around freezing or even colder, but forecasts of highs in the 40s tended to offset that to some extent. The South, which had enjoyed a relatively mild Wednesday, could expect some cooling Thursday but nothing especially cold as few sections were forecast to go below the 50s.
A pair of storms moving inland Wednesday over the West Coast were predicted to bring snow to much of the interior West through Friday.
A Midwest marketer noted that while his area would fail to get above freezing Thursday, the fact that the low would rise from single digits Wednesday to the 20s was welcome relief. In spite of the late screen run-up, he expected the forecasts of relatively moderate conditions in most regions during the coming week to ensure softness in most or all of the cash market Monday.
The marketer said he was not seeing much bidweek business getting done Wednesday. He attributed that to a lot of people already being on vacation, and said those that worked mostly wanted to get their holiday weekend deals done and get out early. January trading should pick up substantially Monday, he said.
He reported seeing no bids but several offers of January Chicago basis at plus 45 cents on IntercontinentalExchange Wednesday.
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