Despite freezing conditions still dominating the weather picture across the northern half of the U.S. and Canada, the cash market was softer at nearly all points Monday. A few flat points, mostly in the Rockies, were exceptions as Northeast citygate plunges of more than 60 cents led overall price declines that were mostly between a nickel and 20 cents.
A new storm was expected to move into Michigan Tuesday but to have little impact in the rest of the Midwest, although the region’s temperatures will still be cold. Meanwhile, the Northeast could expect a brief respite before another system invades it Tuesday night; however, the precipitation is expected to be more liquid than solid this time. Temperatures elsewhere will range from fairly moderate in the Southwest to chilly in the South and the Pacific Northwest to frigid in the Midcontinent.
An early dive of about half a dollar in January futures helped pull late cash quotes further down, although the screen later recovered somewhat to end the day down only 26.7 cents. A Houston-based marketer noted that cash failed to get any carryover support from Friday’s big futures run-up of just over 60 cents. He thought that was partly due to traders having a better grasp on Monday of how weather would shape up over the next few days than they did just prior to the weekend.
The Midwest was “a little warmer than it had been,” the marketer continued. He could tell that demand was off because “a couple of people that I had been selling to were not buying today [Monday].”
The “bad weather is ending,” said a Gulf Coast trader, and along with the screen weakness that was a good indicator of lower cash numbers again Tuesday. Another source tended to agree, saying “we’ll probably see enough weather to rally again” before the end of the month, but he didn’t think it would be in the immediate future.
A utility buyer in Florida who had no deals to report said that overnight lows in parts of the state have been “cool” in the 30s lately, but it hasn’t been enough to generate much heating load. Daytime temperatures are comfortable, she added.
El Paso’s weekend ending of an OFO (see Transportation Notes) likely played a part in greater price weakness at Waha and the Permian Basin than in the rest of the West.
A small hint of bullishness later in the week came from Sonat, which expects to issue an OFO to combat short imbalances Wednesday and Thursday (see Transportation Notes). On the other side of the pipeline coin, despite the industry now being solidly into the storage withdrawal season, Northwest told customers that Jackson Prairie storage “remains at very high levels.” It asked them to work off any imbalances where they are owed gas, and was not allowing any banking north of Kemmerer (WY) Station.
Citigroup analyst Kyle Cooper’s final estimation for Thursday’s storage report calls for a withdrawal of 126-136 Bcf, which would compare with 159 Bcf a year ago and a five-year average pull of 93 Bcf. In an added note, Cooper said of currently high gas prices, “Although it is impossible to determine the timing or extent, certainly all users with the capability to switch to petroleum fuels most likely will begin doing so in the coming weeks.”
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