Natural gas futures continued to fall on Thursday, but losses were subdued after the latest weather data showed the upcoming cold weather would linger a little longer than expected. Another plump pullback from storage may also have provided support, with March Nymex futures trading 5.0 cents lower on the day at $3.959/MMBtu. April slipped 3.7 cents to $3.943.
In short :
Spot gas prices also extended their losses, with NGI’s Spot Gas National Avg. down 46.5 cents at $3,690.
As with the start of the year, futures were again volatile on Thursday amid continued swings in long-term weather patterns. The latest government inventory data also caught the eye, but ultimately had little influence on price behavior.
Instead, prices fell early as overnight European weather data trended slightly warmer for the 11-15 day period. Production also continued to recover from the cold weather-induced pipeline freeze that dampened production last week. The March Nymex contract fell to $3.882 before rebounding within pennies of the $4.00 mark.
This is the net effect of weather and supply trends which Bespoke Weather Services said would likely push late winter storage stocks towards 1.4 Tcf – “very different from a week ago at 10 days, when it looked like we might end up at just 1.2 Tcf.
Houston-based Mobius Risk Group said a continuation of high daily/weekly volatility was something it expected last week although fundamentally there was very little change in the market. Dry gas production has recovered from recent freezes, Canadian imports into the Lower 48 have subsequently fallen, and liquefied natural gas (LNG) feed gas demand generally remains near the 12 Bcf mark /d.
“What has been abundantly clear over the past two weeks is the fact that the weather has the potential to generate market moves on a scale not seen in over a decade,” Mobius said. “Beyond the roller coaster provided by Mother Nature, the underlying context of insufficient global Btus remains.”
EIA’s 222 Bcf Draw a Snoozer
Nationally, however, the latest storage figures from the Energy Information Administration (EIA) have raised little concern. The 222 billion cubic feet drawdown factored in colder-than-normal temperatures across most of the country in the week ending Feb. 4, resulting in another sharp decline in inventory — but not quite as sharp. that some had expected.
The drawdown of more than 200 Bcf from stocks – the fifth in a row – broke historic drawdowns in similar weeks. Last year, the EIA recorded 174 billion cubic feet in the same week, while the five-year average is 150 billion cubic feet.
Broken down by region, the South-Central region leads with a steep 74 bcf decline in inventory, including a 50 bcf decline in salt-free installations and a 24 bcf increase in salts, the EIA said. Midwestern stocks fell 64 billion cubic feet, while Eastern stocks fell 56 billion cubic feet. The Pacific and Mountains regions also saw double-digit storage declines of 15 Bcf and 12 Bcf, respectively.
Noting that some analysts had estimated the draw to be much higher, Dan Myers, senior market analyst at Gelber and Associates Inc., said the EIA figure reflected a shift from gas to coal and wind generation. higher week/week.
“Last week’s cold moment was a wildcard, but I expect you’ll see it pop up with gels in next week’s issue,” Gelber said on The Desk’s online energy chat, Enelyst.
Meanwhile, Mobius pointed out that salt withdrawals in the south-central region are expected to be much higher in the next EIA report. Drawdowns could top 40 billion cubic feet despite a possible decline of 25 population-weighted degree days week/week.
“An expanding salt deficit coupled with an end-of-March stock of less than 1.4 Tcf, and the risk of summer construction of 2 Tcf or less, are factors that should provide strong price support not far from where we are currently trading,” said Mobius.
Less than $4 worth of gas at the end of winter
Spot gasoline prices across the country recorded another day in the red, although freezing weather is expected to return to the eastern half of the country in the coming days. NatGasWeather said the coming cold blast will likely be the last arc for widespread polar air in the United States this winter. Subsequent cold spells should be brief and more localized.
The Northeast sported the largest price discounts, topping $5.00 in parts of New England. Spot gas prices at Algonquin Citygate fell $4.115 a day to an average of $4.210, while upriver in Appalachia Columbia Gas fell 20.5 cents to $3.465.
With respect to pipelines, Algonquin Gas Transmission’s Yorktown M&R Replacement and Reliability Project [CP19-13] went live last month, according to Wood Mackenzie. The company noted, however, that gas flows to the Yorktown M&R station had not yet started.
The project is expected to improve the flexibility and reliability of the Algonquin system by allowing additional deliveries from this point of approximately 8.5 MMcf/d. Initially, the project was supposed to increase the capacity of the Yorktown M&R station to approximately 31.2 MMcf/d from the current capacity of 9.5 MMcf/d. However, the federal certificate for the project was amended to reduce the certified capacity from 31.2 MMcf/d to 18 MMcf/d after shipper Consolidated Edison Inc. indicated that it no longer required the total capacity of 31.2 MMcf/d. Elsewhere in the country, Southeast Treasury held losses to less than 50.0 cents, while the majority of locations across Louisiana fell less than a quarter. Henry Hub fell 17.0 cents to $3.885. Similar price declines were seen in the Midwest, Midcontinent, Texas and West Coast.