Prices dropped at nearly all points Tuesday as moderating weather trends were expected to continue in the South, Northeast, Rockies/Pacific Northwest and parts of the Midwest. A 4-cent decline by January futures a day earlier contributed a modest amount of bearishness to the cash market.
A few flat to nearly 10 cents higher quotes in the Midwest and Gulf Coast ran contrary to the overall downturn. Losses ranged from a little less than a nickel to about $3.50. Northeast citygates again saw triple-digit plunges as they continued their descent from the lofty heights to which they had soared in last Friday’s trading for a frigid weekend.
More widespread softness is expected Wednesday due to the extra-long holiday weekend and weather continuing to get milder in several regions.
The forecast was a mixed bag in the Midwest. Some locations such as Chicago, Detroit and Cincinnati were due to get warmer Wednesday, with Cincinnati expected to go all the way into the relatively moderate low 50s. Other areas such as Des Moines, IA, and Minneapolis are heading in the other direction temperature-wise, with both forecast to see lows around zero.
After a two-day visit to near-freezing levels Sunday and Monday, the South is due to return to the mild 70s highs that had prevailed last week through Saturday.
Although ice and snow will still be plaguing early-morning travel in the interior Northeast Wednesday, mercury levels will be rising and changing much of the frozen precipitation to water by the afternoon. Both New York City and Boston are predicted to see highs get to the vicinity of 50 degrees, which would be a great relief from the past few days.
Freezing temperatures will still dominate in the Rockies and Pacific Northwest, but both regions will be a little milder than before. Although two storms are expected in the West Wednesday, merely chilly conditions are due in the Southwest and nonmountain California.
The relaxation of winter’s grip on northern market areas was reflected in the further elimination of pipeline OFOs and imbalance restrictions (see Transportation Notes). However, Florida Gas Transmission said it initiated an Overage Alert Day due to cold weather in Florida and low linepack.
“It’s still bitter cold here,” despite temperatures having risen from sub-zero to positive single digits Tuesday, said a Calgary-based producer. Actually, the main problem is that very cold temperatures have been more prolonged than usual, he said, adding that local road conditions are “the worst I’ve seen in 20 years.”
The producer didn’t see much importance in the 44.3-cent spike by January futures Tuesday, saying he thought it was primarily a result of lack of liquidity due to many Nymex traders being on holiday vacations this week.
He said bidweek officially got under way Tuesday with fairly active trading, but he expected to see less business getting done Wednesday because of a short day for most traders. He reported January baseload prices trading in the low $5.10s at the Southern California border, around $5.57 at Malin, which he called a “decent spread” from the border, and in the upper $4.30s at Opal.
In great contrast to the harsh winter weather that was still hassling residents of the northern half of the U.S. Tuesday, the National Weather Service (NWS) expects few below-normal temperatures in the Dec. 29-Jan. 2 period. In its six- to 10-day forecast posted Tuesday afternoon, NWS predicted below-normal readings in most of Wisconsin along with northern sections of Minnesota and Michigan. Above-normal temperatures were forecast everywhere south and east of a line extending westward from the northern Mid-Atlantic through the central Midwest to the southeastern corner of Montana, where the line turns southward through western Wyoming and eastern Utah to northwestern Arizona.
Citi Futures Perspective analyst Tim Evans said he expects a storage withdrawal of 145 Bcf to be reported for the week ending Dec. 19, followed by pulls of 160 Bcf and 95 Bcf in the weeks ending Dec. 26 and Jan. 2, respectively. The estimate by Stephen Smith of Stephen Smith Energy Associates for the week ending Dec. 19 is a 142 Bcf withdrawal.
Analysts at SunTrust Robinson Humphrey/the Gerdes Group are forecasting a 134 Bcf draw for the week ending Dec. 19, saying a 5% sequential increase in heating degree days was partly offset by about 1 Bcf/d less gas-fired power generation demand from week to week. They estimated that Canadian imports averaged 9.9 Bcf/d last week, about 1.5 Bcf/d lower year-on-year (y/y), while liquefied natural gas imports averaged 0.9 Bcf/d, largely in line with year-ago levels. “The storage withdrawal should be well below last year’s 165 Bcf withdrawal and will likely leave storage at a y/y surplus for the first time since late ’07,” the analysts said.
©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |