Wednesday’s biggest price gains of up to 20 cents or so were concentrated in the West, but most of the market was limited to performances of flat to up a little more than a dime. Traders were looking beyond current mild conditions expected to prevail into Thursday in most areas, a marketer said, and instead focused on forecasts of significantly colder weather going into the weekend.
Some Northeast citygates joined the West in double-digit increases, but the East in general rose by about a dime or less.
“Our first really severe winter weather [of the season] is due Friday night and Saturday,” said a Midcontinent/Midwest marketer, and Wednesday the cash market was looking a couple of days ahead toward that. Cold in the region should this weekend should last through the middle of next week, he said. The marketer was unable to detect much hangover effect from the oil products futures spikes Tuesday, noting that gas had risen only a dime and then lost more than that again Wednesday. He was concerned that Nymex “has a lot of people long on crude and short on natural gas, so any position switches there could trigger” what he would consider “a false rally.”
A frigid blast of winter accompanied by high winds was already under way in the Pacific Northwest and Western Canada, and that system was expected to head eastward into the already chilly Upper Plains and more moderate Midwest. Heavy wet flakes of snow were reported in the Portland, OR area, while Calgary got a couple of inches of snow Tuesday and more was falling Wednesday, said one trader. He had to cut a conversation short, saying Vector was curtailing approximately 20% of firm deliveries into Dawn and he needed to shift some supplies around.
“Temperatures are dropping as we speak,” said a Pacific Northwest trader. It’s not a “huge” arctic outbreak, he added, “but colder weather is coming.” Sumas activity seemed to be busier than usual as a result, he said.
It was “warm, warm, warm” Wednesday for mid-November in the Upper Midwest, a marketer said, but she was anticipating colder weather late this week and snow showers next week. “We’ve been getting kind of long on gas because so far the [late-autumn] weather hasn’t been as cold as we expected,” she commented.
A Midcontinent marketer was a bit skeptical of Wednesday’s rally, saying, “There was no fundamental reason for the strength as we saw 66 degrees and more warm temperatures due Thursday.”
One source said the EIA is expected to report the season’s first net (overall) storage withdrawal Thursday morning, but he and his staff were waiting to see if it would be for real. Meanwhile, trading for December was staying pretty lackluster, he said.
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