No severe late-season blast of winter is due, but temperatures are dipping low enough in northern market areas to give a boost to recently flagging heating load for gas. The cash market responded with moderate increases at nearly all points Wednesday.
Only a few instances of flat quotes prevented across the board gains. The upticks ranged from 2-3 cents to about 15 cents, with a sizeable majority being limited to single digits. The largest ones of more than a dime tended to be concentrated at Northeast citygates, where a cold front will be reintroducing near-freezing lows Thursday, and in the Midcontinent.
Cash prices managed to firm without any prior-day futures support, since the April contract had continued to fall another 2 cents Tuesday. But Thursday’s market will have screen backing to go along with the moderate resurrection of weather-based demand that propelled it higher Wednesday. April gas futures not only rebounded by 19.1 cents, but also closed nearly a dime above the psychologically important $7 level.
A cold front had already taken Midwest temperatures to near-freezing Wednesday and was scheduled to complete the job Thursday, with lows of 30 and 31 forecast for Chicago and Detroit, respectively. Another low moving south from Canada is expected to do much the same for the Northeast, with the low in Boston predicted to fall from around 49 Wednesday to 34 Thursday.
Elsewhere, it still may be officially winter on the calendar, but for residents of the South and most of the West it continues to feel considerably like spring has already sprung. Date-specific record highs are possible Thursday at some locations in the desert Southwest, according to The Weather Channel.
“Yeah, there’s a little weather moving in,” acknowledged a Midcontinent/Midwest marketer, but he didn’t see all that many people actively looking to make spot gas purchases Wednesday. That suggested to him that quite a few buyers are continuing to draw down their storage accounts in lieu of buying new production. The marketer added that he thinks the cash market has been following Nymex a lot recently, so he expects cash numbers to rise Thursday approximately as much as April futures did Wednesday; that is, nearly 20 cents.
He is finding activity in the daily market close to “dead” this week, so he is spending more time on requests for proposals than usual. A lot of buyers currently are looking to set up summer term deals, he said.
The market also is essentially “dead” for the fuel buyer at a western electric utility, but for a different reason. She said she hasn’t paid much attention to gas price trends recently because she hasn’t been in the daily market for the past week or so. That’s a reflection of mid-March weather being so moderate that running gas-fired peaking units has been a very low priority for her company, she said.
Analyst Ron Denhardt of Strategic Energy & Economic Research expects the storage report for the week ending March 9 to reveal a withdrawal of 112 Bcf. The Reuters survey found an average estimate of a 115 Bcf pull. The range of estimates by 24 industry players was 86-140 Bcf, the news service said. Bentek Energy said it’s looking for a 110 Bcf withdrawal.
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