The blast of cold air that descended through the Midwest into much of the South at midweek last week would be waning to some extent during the weekend. So despite a moderate amount of prior-day futures support, the brief decline of heating load combined with the usual weekend dip of industrial demand to push cash prices lower across the board Friday.
Midweek
Articles from Midweek
Traders See Moderate Short-Covering; November Gains
November natural gas rose Monday as traders saw little in the way of fundamental changes and looked for the market to trade lower by midweek. After what was deemed a round of short-covering November had gained 6 cents to $3.541 and December was up by 1.6 cents to $3.836. November crude oil vaulted $2.43 to $85.41/bbl.
Most Points a Bit Higher as Mixed Pricing Prevails
The brief midweek firming effect on gas prices from colder weather began to fade a bit Thursday as modest warming trends were in effect in such areas as the South, Northeast and Midwest. They weren’t substantial enough to generate much in the way of cooling load, but they caused the market to be mixed on small price changes both up and down from flat.
Mild Forecasts, Screen Cause Falls at Most Points
A marketer had correctly predicted Monday (see Daily GPI, April 7) that the screen softness that day would outweigh any remaining midweek heating load and drive Tuesday’s cash prices lower. But while he looked for mostly modest declines, a large majority of them were in double digits.
Some Points Rebound, But Softness Remains Dominant
What is expected to be a short-lived midweek return of colder temperatures in the Midwest and Rockies helped several points rally Tuesday from Monday’s overall softness. The cash market remained weak for the most part, however, as the continuation of a warming trend in the Northeast and largely static mild conditions in the South kept heating load minimal for mid-March.
Northeast Spikes Lead Rebounds at Most Points
The midweek buildup of heat in many sections of the U.S. and Eastern Canada was able to overcome further prior-day screen softness in spurring rebounds in most of the cash market Thursday. However, it’s highly unlikely that gains will continue Friday after a very bearish storage report led to a steep plunge in August natural gas amid another meltdown day in Nymex’s energy futures complex.
Mixed Price Movement Sees Mostly Losses
The cash market took a midweek breather following two days of mostly strong gains at nearly all points. Wednesday’s quotes were mixed but predominately to the downside, with many points flat or close to it in either direction. Cooling trends Thursday in the Northeast, Midwest and Rockies are keeping heating load fairly sizeable, but it is likely that with the traditional end of storage withdrawal season less than a week away, mandatory withdrawal ratchets are starting to supplant spot gas purchases more than before.
Industry Brief
A fire that closed Williams Partners LP’s Ignacio gas processing plant near Durango, CO, midweek will reduce expected cash flows by $10-20 million, primarily in 4Q2007, the company said. The range includes the expected mitigating effect of Williams Partners’ property damage and business interruption insurance. Williams Partners said it does not expect the reduction in cash flow to impact its regular quarterly cash distributions. The fire began in a cooling tower, damaging it and a few adjacent buildings before being extinguished. No injuries were reported. The Ignacio plant is part of Williams Four Corners LLC, which is owned by Williams Partners. Approximately 100 MMcfe/d of the plant’s normal 450 MMcfe/d production capacity has been rerouted to other facilities in the San Juan Basin. In addition to the Ignacio plant, the Four Corners gathering system is connected to the Kutz and Lybrook gas processing plants and the Milagro and Esperanza gas treating plants in northwestern New Mexico. The Four Corners system’s normal volumes exceed 1.5 Bcfe/d. The cause of the fire is unknown and is under investigation.
Most Eastern Points Rally With Returning Cold
The early-week bear market that resulted primarily from forecasts of a midweek break from harsh winter weather in some areas proved to be short-lived, at least in eastern markets. Prices rebounded from about a nickel to nearly 30 cents Wednesday at most points in the East as arctic air masses were predicted to bring sub-zero wind chills to the Midwest and Plains states Thursday and continue on into the Northeast and much of the South.
Cash Continues Big Gains Across the Board
With midweek heat staying fairly strong in nearly all areas — especially the West — and with extra support from a prior-day screen spike of nearly half a dollar, cash quotes again rose by sizeable double-digit amounts at all points Tuesday.