Physical gas prices Friday were within a penny or two of unchanged at most points, and if you exclude Northeast price plunges, the overall market shed an average of a penny. However, if wide-ranging losses in the East and Northeast are factored in, the decline on the day expands to a dime.
Futures managed gains as cold and storms were expected this week. March futures gained 4.5 cents to $3.291 and April rose 5.1 cents to $3.349. April crude oil staged something of a recovery and added 29 cents to $93.13/bbl.
Rocky Mountain producers were optimistic that another storm would lower temperatures and raise demand. “Bentek says we are going to have another cold blast this weekend and should lift regional demand [Rocky Mountains] as high as 3.4 Bcf/d or 600 MMcf/d above normal,” a Denver producer said.
“AccuWeather says temperatures in the Northeast and Midwest will range from normal to below for the next 10 days, and Commodity Weather Group said the cold will last through the middle of March. The early read on next week’s storage is for a 160 Bcf withdrawal and that’s compared to a 106 Bcf last year. I’m surprised the gas market isn’t a little stronger.”
Weekend and Monday gas at Rocky Mountain points was little changed. Quotes at Opal were down a penny to $3.30, and on CIG Mainline gas was seen at $3.27, also down a penny. On Northwest Pipeline Wyoming deliveries for the weekend and Monday were unchanged at $3.29, and at the Cheyenne Hub parcels came in down one cent at $3.29. On Questar, gas for weekend and Monday were quoted at $3.26, down a penny.
At Northeast points prices continued their volatile ways, posting multi-dollar losses as temperatures were expected to be at or slightly above seasonal norms. AccuWeather.com forecast that Friday’s high in Boston of 37 would reach 39 by Monday, just a degree below normal. Hartford, CT’s 41-degree high on Friday was anticipated to rise to 43 on Monday, above the seasonal high of 40. In New York the high of 43 Friday was seen rising to 46 Monday, 3 degrees above its norm.
The weekend price slump took place in spite of seemingly supportive weather forecasts. “The third storm in as many weekends is on the way for New England and can bring a fresh foot of snow to some areas,” said Alex Sosnowski, AccuWeather.com meteorologist.
“While rain will dominate the storm along the South Coast and will occur in part in central areas [New England] early, enough snow will fall Saturday night into Sunday to cause travel disruptions, power outages and foiled plans. As the storm strengthens, colder air will invade the storm and winds will pick up substantially in southeastern areas of Washington, DC, to Philadelphia and mostly rain around New York City. Snow will try to mix in at the tail end of the storm in New York City, Long Island and along the South Coast of New England. The duration and intensity of this snow will dictate the amount of accumulation.”
Weekend and Monday gas into the Algonquin Citygates tumbled $3.89 to $6.25, and upstream deliveries on Iroquois Waddington were seen at $3.82, 23 cents lower. On Tennessee Zone 6 200 L weekend and Monday gas was quoted at $6.13, down $3.40.
Farther south, gas for the three-day period in the Mid-Atlantic slumped as well. Gas on Dominion fell 2 cents to $3.32, and deliveries to Tetco M-3 were off 13 cents to $3.55. Gas bound for New York City on Transco Zone 6 shed $1.65 to $4.04.
Other market centers were steady to lower. SoCal Citygates were quoted at $3.60, unchanged, but El Paso Permian came in at $3.22, 3 cents lower. Henry Hub was seen at $3.27, down 2 cents, and at the Chicago Citygates weekend and Monday gas was $3.42, 3 cents lower.
Futures trading was lackluster. “We only traded a 6-cent range all day, but I look for the market to trade $3.25 for Monday’s options expirations and come off a little bit on Tuesday for [March] contract expiration; $3.25 is probably the number for options expiration,” a New York floor trader said.
Weather forecasts were mostly unchanged overnight, and forecasters see somewhat more variability in the longer term. Commodity Weather Group in its 11- to 15-day forecast shows below-normal temperatures across nearly the entire eastern half of the country with above-normal temperatures in portions of Southern California.
“[A] bigger divergence emerges in the 11-15 day as the American operational model rushes to warm the pattern, and the European ensembles hold the cold pattern in place with continued Pacific-side support,” said Matt Rogers, president of the firm. He added that they offer some compromise by late period by showing some variability. “Even if the cold pattern persists deeper into March as last night’s Euro weeklies advertised, we would probably see storm-induced temperature volatility at times.”
Analysts see a limited price response to the forecasts. “[W]e will reiterate that upside response to these forecasts will be limited by the late stage of the heavy usage cycle as well as by the fact that deviations from normal across the Midwest don’t appear pronounced,” said Jim Ritterbusch of Ritterbusch and Associates. “Some unusually cold temps earlier this week could force a larger draw in next week’s EIA guidance; we still feel that end-of-quarter supply is still on track for about the 2.1 Tcf area if NOAA’s longer-term forecast for a mild March proves correct.”
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