Advances

FERC last Wednesday ruled that a proposal to form a regional transmission organization (RTO) covering a Pacific Northwest footprint known as RTO West will not only meet the requirements of the agency’s RTO-related Order 2000 — with some modifications and further development of certain details — but can also provide a basic framework for a standard market design for the West.

As sources had correctly predicted, the market took its price cues Tuesday from the previous afternoon’s screen gain instead of continuing general weakness in fundamentals. The result was double-digit increases between about a dime and a little more than 20 cents at most points. The notable contrary position was in the Rockies, where flat to moderately lower numbers prevailed.

High heat levels were returning Monday in some areas that had enjoyed some weekend relief, such as the Northeast, and never really left other areas, such as the South. The resultant power generation load was being felt in rising gas prices at nearly every point. Except for flat to slightly higher numbers for some Rockies pipes, Niagara, and ANR ML7, price increases elsewhere ranged from about a nickel to more than 40 cents at Transco Zone 6-New York City pool. Most were in the vicinity of a dime.

High heat levels were returning Monday in some areas that had enjoyed some weekend relief, such as the Northeast, and never really left other areas, such as the South. The resultant power generation load was being felt in rising gas prices at nearly every point. Except for flat to slightly higher numbers for some Rockies pipes, Niagara, and ANR ML7, price increases elsewhere ranged from about a nickel to more than 40 cents at Transco Zone 6-New York City pool. Most were in the vicinity of a dime.

The January aftermarket started out strongly relative to end-of-December numbers, but without straying too far from apparent first-of-month index levels. Nearly all of the swing movement ranged from flat to about 20 cents higher, but gains tended to get much bigger at Northeast citygates, topped off by an advance of more than a dollar at the Transco Zone 6-NYC pool.

Amid two momentous selling waves, natural gas prices tumbled lower in dramatic fashion Thursday, as traders looked past bullish weather forecasts to focus on the undeniably bearish supply situation. Sellers were fast out of the chute as profit-takers pressured the January contract to a gap-lower open. However, that was only the beginning. After it was announced that only 81 Bcf had been drawn from storage last week, the heavy selling resumed. The January contract settled at $2.555, down 12% or 35.6 cents for the day.

Prior to Friday (the official first day of winter), the weekend market had looked like a toss-up, with forecasts of colder Christmas weather throughout the East and into the Southwest arrayed against the demand slump from extended business closures. Chalk one up for the bulls as the upcoming cold temperatures weighed a little more heavily on traders’ minds Friday, prompting them to send most points higher by small amounts.

Strong cash price advances continued Tuesday, but there were signs that this week’s bull market may have just about run its course. The futures screen stayed positive for a while in the morning, but then later settled for a 12.6-cent loss that took it back to exactly where it had ended regular trading Friday. And unlike the previous couple of trading days where late quotes had moved sharply higher, cash prices were coming back off again near deadline Tuesday.

Following on the heels of Wednesday’s dime advances, natural gas futures continued higher Thursday as nervous buyers re-entered the market to cover short positions. Gains were greatest in the prompt month, November, which advanced 5.1 cents to finish at $2.531. Comparatively, the out-months were less impacted by the buying pressure, as the front end of the market was limited to modest gains, while the back end of the market experienced slight losses. Volume was on the high side with 87,773 contracts estimated to have changed hands.