The overall cash market averaged close to 8 cents higher Friday, but if the widely fluctuating gains and losses of eastern points are subtracted, the market fell close to a nickel for weekend and Monday deliveries.
Gulf points bucked the overall down trend and most locations were flat or managed gains, but eastern points were pummeled with gains of more than $7 and losses greater than $3. Futures limped lower, and at the close March was off 3.8 cents to $3.301 and April had fallen 3.9 cents to $3.353. March crude oil gained 28 cents to $97.77/bbl.
A Florida trader long gas said the recent cold had enabled him to shrink his inventory, “not at the prices I would have liked, but with the maintenance on Florida Gas Transmission Zone 2 and the colder weather, I thought prices would go up more.
“There was some demand out there, so I was able to move some volumes. Zone 3 is carrying about a 2 cent premium to Zones 1 and 2 and the Hub. Nothing is going to happen until late April or early May unless the pipeline does some maintenance early. Right now we are doing only 110,000 to 120,000 Dth/d, but in the summer we’ll do 150,000 to 180,000 Dth/d”.
Gulf points were mainly higher. Weekend and Monday deliveries on Florida Gas Transmission Zone 3 rose 2 cents to $3.38 and gas on Transco Zone 3 added 2 cents to $3.35. On Tennessee 500 L, parcels were up 1 cent at $3.32, and at the Henry Hub Monday gas ticked up a penny as well.
Deliveries to Tetco E LA gained a penny to $3.27, and gas on Columbia Mainline was also up a penny at $3.30.
New England next-day gas continued to be driven higher by surging power prices. IntercontinentalExchange reported that weekend and Monday power at the New England Power Pool’s Massachusetts Hub jumped $33.53 to $194.09/MWh. At the PJM West delivery point, however, real-time peak power prices added just 50 cents to $47.47/MWh.
Weekend weather throughout New England and the Mid-Atlantic was forecast to remain on the cool side. Wunderground.com predicted Friday’s high in Boston of 34 would continue through the weekend into Monday. The normal high is 39. New York City’s Friday high of 34 was seen dropping a couple of degrees over the weekend to a Monday high of 32. The normal high in New York at this time of year is 36.
The National Weather Service in New York City said “weak low pressure will continue to move to the east of the region…farther out into the Atlantic. High pressure then builds in from the south and west and moves offshore on Saturday. A series of low pressure systems will then pass [through] the area from Saturday night through Friday.”
One trader seemed resigned to Northeast volatility as long as cool weather remained in play. “There is always going to be a volatile daily market because of the demand from power plant loads. They don’t baseload. They only base what they know they are going to flow and if they have to buy some gas, they go and buy the gas at whatever the marginal cost is,” said a Houston-based marketer.”
Quotes at the Algonquin Citygates jumped $8.44 to $30.07, and deliveries to Tennessee Zone 6 200 L added a stout $3.83 to $25.13. At Iroquois Waddington weekend and Monday gas tumbled $3.33 to $11.42.
On Dominion gas came in 2 cents higher at $3.35, and on Tetco M-3 parcels were seen 17 cents lower at $4.60. Gas bound for New York City on Transco Zone 6 skidded 70 cents to $13.28.
Ahead of the weekend, longer-term weather forecasts show very modest changes. MDA Weather Services in its six- to 10-day outlook shows above and much above normal temperatures west and south of a line from Michigan to Maryland and east of Colorado. Much above normal temperatures are seen for Texas, Arkansas and Louisiana. Portions of California are cooler than normal.
“Colder tweaks were made to several areas within this time frame. Progression should have brought the composite map warmer [Friday], yet the actual result is the same to cooler than yesterday. The anticipated warm-up appears less intense and slower to overspread the Great Lakes and Northeast here, allowing cold to linger longer into mid-period.
“Still, warmer Pacific influences are favored to gradually move to the forefront and bring about widespread above to much above by the final couple days of the period. The West will turn colder mid to late period as the East warms,” the forecaster said in its morning report.
Longer term, analysts are not bullish on natural gas. “We feel that today’s selling was limited by caution ahead of the weekend that could bring some bullish shifts to the weather views. But we would also note that as the market proceeds further into the month of February, the weather will be diminishing as a supportive price item,” said Jim Ritterbusch of Ritterbusch and Associates in closing comments to clients.
“We will further note that seasonal storage withdrawals will be, smaller from here as the days become longer, cold temperatures subside etc. Meanwhile, we’re still viewing the production factor as deserving of a bullish check mark as year-over-year gains have been getting smaller. We would also indicate that natural gas rig counts are in the process of bottoming, a development that should sustain year over year gains throughout the entirety of this year. Overall, we’re maintaining a bearish trading posture as we look for an eventual decline in March futures to about the $3.10 area.”
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