Spikes

Raymond James & Associates Inc. on Monday raised its 4Q2012 natural gas price assumptions by 75 cents and lifted the 2013 forecast by 50 cents, predicting 1Q2013 price “spikes to near $5.00/Mcf.”

As a Northeast marketer had predicted the day before, prices continued to move higher Friday (including several spikes) at citygates in his region, but moderate softness reigned in the rest of the market. The Northeast was bracing for a cold blast with temperatures bottoming out around freezing or lower. But although similarly frigid conditions were in the forecasts for the Midwest as far south as the Midcontinent and for the Rockies, those areas failed to find enough heating load to lift prices.

Northeast price spikes had some citygates in the region averaging more than $6 Tuesday amid a generally little-changed cash market. The tropical storm factor, which never was significant anyway, continued to fade into the open Atlantic, but very hot forecasts in many areas remained a constant for gas prices.

Lows slipping into the low to mid teens Tuesday and often accompanied by snow generated higher numbers, including some triple-digit spikes in the Northeast and a few other locations Monday. However, reflecting some weather moderation and easing of supply tightness since late last week, most of the market recorded losses.

Although no Northeast locations were able to breach the $10 average level a day earlier, they did so with a vengeance Thursday as further spikes carried them solidly into quadruple-digit territory. As it often is, Transco Zone 6’s New York pool was king of the price hill with the day’s top quote of $15 and top average of $14.31.

Triple-digit spikes returned to most Northeast citygates as significantly colder conditions were anticipated for Sunday and Monday, but in the rest of the cash market it was even greater softness Friday than before as the previous day’s 17.4-cent drop by prompt-month futures, the industrial demand loss experienced over a weekend, and cool to merely chilly temperatures being dominant from the western end of the South through much of California contributed to an overall bearish mood.

The Northeast’s price strength this week, which included spikes of nearly a dollar or more than a dollar during the previous two days, was starting to run out of steam Thursday with retreats at most citygates as a modest warming trend was expected to continue into the weekend. However, the rest of the market was getting at least a little second wind as single-digit gains prevailed at most points after overall softness a day earlier.

Northeast spikes, including one of about a dollar by Transco Zone 6-New York, led further price increases at a large majority of points Tuesday as widespread frigid weather continued to stoke major heating load and prompted some analysts to predict that a very large storage withdrawal will be reported for the preceding week. The 16.9-cent rise by January futures a day earlier also helped boost Tuesday’s cash market.

Huge spikes that often well exceeded a dollar at Northeast citygates were in sharp contrast to falling prices elsewhere Thursday. Although lows would continue to be around freezing or below at many locations Friday, including some in the South, a continuing moderation of overall heating load from previous levels combined with Wednesday’s retreat of 21.6 cents by January futures to generate losses at most points.