Mild weather throughout most of the North American continent continued to work its price-depressing magic Friday, augmented by day-earlier weakness in energy futures and to a lesser extent by the typical slump of industrial load over a weekend.
The declines ranged from just under a nickel to a quarter, with most of the larger losses occurring at western points.
A cold front due to move into the Northeast by Saturday morning limited several regional citygates to single-digit dips. Only the New England points (Algonquin citygate, Dracut and Tennessee Zone 6) saw downturns of a dime or greater.
A high-linepack OFO by SoCalGas (see Transportation Notes) probably helped depress western prices. However, a utility spokeswoman said the OFO was for Friday’s Evening Cycle nominations and would not be in effect Saturday. Kern River continued to report high linepack in all segments Friday. But on the other hand, Westcoast maintained an imbalance tolerance range of 20% pack and zero draft, indicating low linepack.
A producer in Calgary said the market was “staying pretty quiet. There’s no weather demand around the continent, so a lot of current spot business seems to be for storage,” which would indicate the industry is getting an early jump on injection season. Even southern Alberta is seeing moderate temperatures, he added, getting a high in the upper 40s Friday and a chance of the 60s over the weekend.
The producer reported doing a Chicago citygate basis deal for April at last-day settlement plus 4 cents Friday morning. He thought plus 4 was about where most Chicago basis was trading so far, saying based on Friday’s screen that would put fixed prices up into the low to mid $5.40s. “With Chicago trading in the high $5.10s for the weekend, that means swing is discounted more than 20 cents from next-month gas.”
A Texas-based producer quoting weekend Florida Gas Transmission Zone 1 sales in the low $5.10s said his deals were done early, and prices moved a little higher later. A counterparty told him power generation load in South Texas was picking up for the weekend (Corpus Christi had highs forecast in the 80s Friday and Saturday), and that may have helped boost the late Zone 1 prices. FGT has so much pipeline integrity work scheduled in April that the producer didn’t expect to do any baseload deals. “We’ll just keep up with our term contracts and sell what we can on the daily market,” he said.
An East Coast utility buyer said she had been “trying to get some April business done, but there’s too many interruptions, so nothing yet.”
Citigroup’s Kyle Cooper said his initial estimation for the upcoming storage report looks for a withdrawal “somewhere between 30 and 40 Bcf,” which would contrast with a year-earlier build of 36 Bcf. “It will clearly reduce the huge surplus to last year and may even drop the level below the three-year average,” Cooper continued. It should continue to expand the deficit to the five-year average. Looking forward, however, last year witnessed two draws with a rather large draw of 46 Bcf [during] the second week of April.”
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