A source in Michigan may have anecdotally sized up the Friday market with an innocent comment: “It’s going to be a warm trick-or-treating night for us.” A warm Halloween in Michigan?!? That kind of unseasonable weather throughout much of the East and the southern reaches of the West went a long way toward explaining why weekend prices plunged across the board.

The overall declines were between about 20 and more than 70 cents, but a large majority were in the range of 40-70 cents. They were fairly evenly distributed geographically, although points in the Rockies and Pacific Northwest, which is where the weekend’s coldest weather was to be concentrated, tended to see many of the smallest dips.

Besides the widespread lack of weather support, weekend pricing also was depressed by the previous day’s storage report. Adding the week-earlier injection of 55 Bcf to EIA’s backward revision upward of 38 Bcf yielded an effective inventory gain of 93 Bcf and put the total over the 3.1 Tcf threshold that is considered a “safe” stash for winter.

Kyle Cooper’s initial estimation for the next report looks for a build in the upper 40s Bcf, which would compare with respective year-ago and five-year average volumes of 27 Bcf and 20 Bcf. The Citigroup analyst went on: “A build of only 24 Bcf would ELIMINATE the storage deficit to last year. For those who wish to ignore the most simplistic of facts, this is one that is phenomenal. On March 7, inventories fell below year-ago levels by 1,007 Bcf. In 238 days, that deficit will be eliminated. Why does anyone think that the entire 4.2 Bcf/d difference apparent for the last 238 days will simply vanish at the first sign of cold weather?”

For a change energy futures were setting a positive example for cash gas. The December gas contract more than made up for its prompt-month debut drop of 14.8 cents Thursday by achieving an 18.3-cent advance Friday. And crude oil and heating oil futures, which had seemed stuck on a down escalator earlier in the week, soared Friday in what was largely attributed to short-covering; crude again surpassed the key psychological level of $29/bbl.

One source allowed that the futures upticks might prove sufficient to help spur a moderate rally Monday. However, he qualified his assessment by saying that he would not expect any rebound if Friday’s downturn had not been so massive. A marketer was thinking along similar lines, saying, “We expected lower prices today [Friday], but were surprised at the depths they reached; we had been looking for more moderate declines.”

But a Midwest utility buyer said she wasn’t surprised by the plunges “because of how warm it is. It sounds like a formula to me: warm weather plus full storage plus little demand equals a price rout.”

Not everyone was basking in mild conditions, however. “Those reports of Eastern warmth are definitely not talking about my part of the Midwest,” a marketer said. “I think we are looking at temperatures in the mid 30s right now.” Sure enough, a slow-moving front was dividing the region into pleasant weather on the eastern side and near-freezing weather to the west.

And there was the Rockies trader who exclaimed to an NGI editor in Portland, OR, “Don’t you in the Northwest tell me about cold! You may be having record lows at 25 degrees, but we’re at 13 degrees right now! I hope we get into the 20s for a high. On top of that, we’ve gotten 14 inches of snow over the past two days. And this snow is going to be around for awhile. Once it falls here it doesn’t go anywhere. It will stick around until spring.”

Winter storm warnings were posted Friday for California, Nevada, Wyoming and Colorado.

Despite PG&E ending a high-linepack OFO, the California market remained under constraint as SoCalGas issued a high-linepack OFO of its own for Saturday (see Transportation Notes). The SoCal border dive of about 60 cents was the West’s biggest by far Friday.

Northwest was something of a loner pipe in fearing low linepack over the weekend (see Transportation Notes), for others besides SoCal were still having problems with too much gas on the system. Nicor Gas (the large LDC for northern Illinois) posted a notice about possibly having to cut pipeline receipts during the weekend because of little storage space and anticipated low load. Sonat did not issue an OFO but continued to caution shippers that a potential OFO was “too close to call” for long imbalances Sunday and Monday.

In addition, a producer reported that gas was backing up on Columbia-Appalachia (TCO) because of delivery restrictions in several market areas. Prices at upstream affiliate Columbia Gulf-mainline “were really taking a pounding” because of the excess of TCO supply.

A Florida utility buyer who did no trading for the weekend figured that Florida Gas Transmission must be “in pretty good shape now” since it was able to make several operational sales out of linepack for Thursday and Friday flows.

The 2003 Atlantic hurricane season ended in quiet fashion. However, The Weather Channel observed Friday that “it’s not out of the question that a subtropical or tropical low could spin up along the southern end of an old cold front [actually the remnants of Tropical Storm Nicholas] somewhere south of Bermuda. Rain may then spread toward southern Florida later in the weekend.”

An industrial end-user reported doing several November-March term deals last week at prices that were “pretty close” to his November-only baseload numbers. “There sure isn’t much heating to be done in the East as heating season begins,” he remarked Friday, adding that it was hard for him to see any lasting price rallies at this point.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.