Snap

A severe fall cold snap gave natural gas markets a chilling foretaste of the next year in Canadian supplies by freezing about 10% of production over the past fortnight, industry analysts say.

While a number of high-energy-demand markets were hit with their first real cold snap of the 2006-2007 heating season late last week, it appears the United States on average will enjoy above-normal temperatures once again this winter, according to the U.S. Winter Weather Outlook released last week by the National Oceanic and Atmospheric Administration (NOAA).

While a number of high-energy-demand markets prepare for the first real cold snap of the 2006-2007 heating season later this week (see related story), it appears the United States on average will enjoy above-normal temperatures once again this winter, according to the U.S. Winter Weather Outlook released Tuesday by the National Oceanic and Atmospheric Administration (NOAA).

Prices soared Monday at all points in the East and most of them in the West as much of the U.S. braced for the first major cold snap of the fall season. However, excess gas supplies and limited options on placing them in the market resulted in large retreats in the Rockies.

Barring a snap back to cold weather, look for natural gas prices to remain “soft” at around $7/MMBtu and perhaps less for the remainder of the first half of this year, Standard & Poor’s Ratings Service said in a 2006 oil and gas trends research note released last week.

Barring a snap back to cold weather, look for natural gas prices to remain “soft” at around $7/MMBtu and perhaps less for the remainder of the first half of this year, Standard & Poor’s Ratings Service said in a 2006 oil and gas trends research note released Tuesday.

Virtually all points were up strongly Tuesday on prospects of a northern cold snap continuing for a while longer. Most of the gains were in double digits, but quite a few points — primarily in the Northeast — rose by dollar-plus amounts.

Reflecting the cold snap in many regions of the country last week, the Energy Information Administration (EIA) reported a 29 Bcf weekly storage injection, which was on the low end of industry expectations and much lower than the previous two weekly injections of 75 Bcf and 77 Bcf. Putting the brakes on the bearish case at least for the session, December natural gas ended up settling at $11.689, up 8.5 cents for the day.

Acknowledging that most of the recent cold snap was fading except in the Northeast, prices fell across the board Wednesday by major amounts (except for a drop of only a nickel or so at Transco’s non-New York City Zone 6 pool). Although sources said the declines primarily were weather-based, Tuesday’s screen downturn of almost 26 cents also had some influence.