Markets

A sustained blast of icy weather across Texas last week put a halt to exploration and production (E&P) activity in the Permian Basin, Barnett and Eagle Ford shales, with Pioneer Natural Resources Co. indicating it could be weeks before the full impact is determined.

Gas price volatility has declined and forward spreads have contracted. With plenty of shale gas around, “who needs gas storage capacity?” is a question on the lips of some. But with the heart of winter fast approaching, attitudes could change, a storage developer told NGI.

Natural gas for delivery Tuesday added 6 cents on average in Monday’s trading, with Midwest points up a couple of pennies as a major influx of cold air was forecast to slide into the area by midweek. At the close January natural gas futures had gained 3.4 cents to $3.988 and February had risen 2.7 cents to $3.984. January crude oil gained $1.10 to $93.82/bbl.

Only slight price changes — and no winter market spikes — are in the forecast for the 2013-14 heating season by Canada’s National Energy Board (NEB).

Physical natural gas for Sunday and Monday delivery tumbled nearly 20 cents in Wednesday’s trading, yet if Boston, New York and Philadelphia are excluded from the analysis, the decline comes in at a more moderate 11 cents.

The northern United States and southern Canada will be dominated by colder-than-normal temperatures over the next three months, while above-normal temperatures are expected across the U.S. South, according to forecasters at Weather Services International (WSI). The heavily populated Boston-to-Washington, DC, corridor may avoid much of the winter’s coldest weather, WSI said.

Spot gas for Wednesday delivery on average fell a penny in Tuesday’s trading. However, if one is willing to assume that market dynamics in the transportation-challenged Iroquois-Algonquin corridor distort the broader national market, removing those prices shows a 6-cent decline overall.

CME Group reported last week that due to a “technical issue” fractional changes have been made to the contract expiration prices of 10 Nymex energy products and related instruments settled between May and October 2013. This is the second time in less than a month that CME has had to issue an energy contract-related settlement revision.

Physical natural gas for delivery Tuesday on average fell approximately 7 cents in Monday’s trading. However, if Algonquin Citygate’s nearly $8 loss and Tennessee’s Zone 6 200 L $6-plus loss are factored out, the overall market change is a gain of about 6 cents.