Cash prices advanced 8 cents on average Thursday as a winter storm that began in the West and Rockies marched through the Great Plains and into the Great Lakes. Only a few Northeast points showed declines.
The Energy Information Administration (EIA) reported a withdrawal of 82 Bcf from gas storage, more than what most traders were expecting, and at the close January futures were up 14.2 cents to $3.462 and February had added 12.9 cents to $3.495. February crude oil rose 15 cents to $90.13/bbl.
Next-day prices in the Midwest and Midcontinent rose following a blizzard that ripped across the nation’s midsection causing dangerous travel conditions and power outages. Following the storm, skies were expected to clear and temperatures drop.
The National Weather Service in Chicago predicted that the “Tail end of wrap-around snow and lake effect [snow] may still be ongoing early Friday morning, but all precipitation should be done by middle morning [Friday]. Skies will be clearing west to east in the morning. Core of coldest air will be over the area Friday morning…and min[imum] temperatures may occur a couple hours after sunrise Friday morning.
“With fresh snow cover on the ground…lowest possible sun angle of the year…and cold air in place…won’t see much recovery in temperatures through the day. Unless its still 32 at midnight…Friday might be the first day this season with the maximum temperature below freezing. Winds will likely still be gusting around 40 miles per hour through the morning hours but winds will gradually subside through the afternoon.”
Wunderground.com forecast that the Thursday high in Chicago of 48 would drop to 28 Friday before recovering over the weekend to 36 on Monday. The normal high in Chicago is 34. St. Louis’ Thursday high of 56 was predicted to fall to 40 Friday and keep sliding to 37 on Monday. The seasonal high in St. Louis is 41.
End-users found that usage wasn’t quite what they expected. A Nebraska utility buyer said, “We have 38,000 customers without power this morning, and by the afternoon we still had 25,000 customers without power. We are thinking that without power, the furnaces can’t operate and burn the gas,” he said.
The buyer said they used only 150,000 Dth and were expecting usage to be closer to 200,000 Dth. “On Monday we were talking about how warm it was and how we would be under budget. The forecasters said we would get some snow, but Wednesday we were in a blizzard. The rest of December looks pretty normal,” he said.
Next-day gas prices in the Midcontinent added about a dime at several points. Quotes on ANR SW were up 9 cents to $3.30, and deliveries to the NGPL Midcontinent Pool were up about 10 cents to $3.31. Oklahoma Gas Transmission added 7 cents to $3.23. Panhandle Eastern came in about 6 cents higher at $3.25.
Across the Great Lakes next-day deliveries rose as well. On Alliance gas was quoted at an average of $3.51, up 9 cents, and deliveries to Chicago Citygate jumped about 14 cents to $3.49. On Michcon Friday parcels came in 11 cents higher at $3.55, and Consumers was quoted at $3.59, up 11 cents. Gas at Dawn gained 10 cents to $3.73.
Northeast points proved to be the day’s prominent laggards. At Algonquin Citygate Friday gas averaged $4.12, 11 cents lower, and deliveries to Iroquois Waddington came in at $4.04, 2 cents lower. On Tennessee Zone 6 200 L buyers were able to pay 5 cents less at $4.15.
Futures traders were not impressed with the day’s advance. “We got a little pop here, but I don’t think it goes much higher than $3.50 to $3.55. I think we will trade down to $3.30 unless we get some real cold weather moving in,” said a New York floor trader.
Longer-term weather forecasts turned cooler overnight and rattled through the futures markets. Commodity Weather Group in its 11- to 15-day outlook shows below- to much-below-normal temperatures in an amoeba-like configuration stretching from West Virginia to Montana, California and Texas. Much-below-normal temperatures are confined to Utah and Idaho.
“Progression of the forecast is continuing to expand cooling over more of the Midwest and South on [Thursday’s] latest 6-10 day [and 11-15 day] update. We are continuing to see gradually improved cold air access to the U.S. compared to the prevailing pattern of the first half of December,” said Matt Rogers, president of the firm.
That cold may or may not provide a favorable usage comparison to last year. In 2011, December storage was drawn down 381 Bcf to 3,462 Bcf. Last week’s 2 Bcf build makes it unlikely that December-ending storage will reach anywhere close to 2011 usage.
Traders did get a better handle on December usage with the 10:30 a.m. release of Energy Information Administration inventory figures for the week ended Dec. 14. Last year at this time, 100 Bcf was withdrawn, and the five-year average stands at a stout 144 Bcf. Analysts at Tradition Energy predicted a withdrawal of 75 Bcf, and a Reuters poll of 25 traders and analysts showed an average 72 Bcf with a wide range of minus 49 to minus 83 Bcf. Bentek Energy predicted a 77 Bcf draw.
The Energy Metro Desk survey revealed a 74 Bcf pull but cautioned that the data signals an EIA “surprise.” John Sodergreen, the editor, says storage “looks like a new high for an end-of-year tally, and most folks are already predicting a record end of heating season tally as well. There’s still a whole lot of weather to go before we can seriously start to freak out about next summer’s gas prices, but this month and next are beginning to look a lot like last year.”
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