Wintry

Wintry weather boosted natural gas consumption and has lifted prices, but the trajectory of U.S. supplies largely has remained unchanged, and that means gas prices may “hunt” this year for the right level of gas-to-coal displacement to keep the market balanced, according to an analysis by Barclays Capital.

Cash natural gas prices on average overall rose 29 cents Wednesday as cold, wintry weather was forecast to march through the Great Lakes and keep temperatures seasonally cold. However, without the distorting affects of multi-dollar price surges at Northeast locations, the market scored a more modest 8 cent gain. Great Lakes points firmed as cold and winter storm warnings were anticipated Wednesday. At the close March futures had risen 1.9 cents to $3.418 and April had gained 1.4 cents to $3.464. March crude oil slipped 2 cents to $96.62/bbl.

Despite a return of spring-like weather bringing cool to mild temperatures to the South, wintry conditions occasionally abetted by snowfalls proved sufficient to rally a majority of points Tuesday, although flat performances were common and most of the gains were in single digits.

Prices were higher in all of the cash market Wednesday, driven primarily by stubborn wintry weather across Canada and much of the northern U.S. — even though the seasons officially transitioned into spring last Sunday — and secondarily by the previous day’s advance of 9.3 cents by April futures. And as a producer had suggested Tuesday, storage buying for price arbitrage opportunities (and maybe by some traders who just wanted to get a jump on the traditional injection season) likely helped boost demand further.

Although the return of wintry weather to much of the Midwest, Northeast and Mid-Atlantic was not as severe as the blizzard-beset period in January and the first half of February, and was already due to start moderating as soon as Wednesday, it was enough to generate price gains almost across the board Tuesday.

With some of the regions hardest hit by severe wintry weather last week getting a breathing spell during the weekend before the next onslaught is predicted to start early this week — and a long holiday weekend contributing its extra interruption of industrial load — prices fell at nearly all points Friday. The previous day’s 10.4-cent increase by March futures apparently had little impact on the cash market.

With some of the regions hardest hit by severe wintry weather last week getting a breathing spell during the weekend before the next onslaught is predicted to start early this week — and a long holiday weekend contributing its extra interruption of industrial load — prices fell at nearly all points Friday. The previous day’s 10.4-cent increase by March futures apparently had little impact on the cash market.

Despite the Christmas week’s burst of wintry cold in a number of regions of the country, only 124 Bcf was removed from underground natural gas storage, according to the Energy Information Administration, which released its latest storage report on Thursday morning. The number was some 20 Bcf below most industry expectations, which caused natural gas futures values to turn lower Thursday after riding high in pre-report trading.

Even a larger than expected storage withdrawal combined with the forecasted one-two punch of wintry Northeast storms weren’t enough to keep bullish momentum alive Thursday as January natural gas futures ended up closing 21.5 cents lower at $7.193, correcting much of Wednesday’s 32.3-cent spike.