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Gas spot prices in the Midcontinent, often the cheapest in the Lower 48, soared to $ 600.00 / MMBtu on Friday as snow, ice and sub-zero temperatures saturated the region.
Oneok Gas Transmission, aka OGT, had gained ground over the past two days as a train of winter storms began to pass through the United States. At the start of the week, the Oklahoma point was trading in the $ 3.00 range. As of Friday, no trades were executed below $ 125.00.
AccuWeather said temperatures are expected to dip to record lows in the 20s, teens and even single-digit numbers in some cases by Saturday night in parts of Arkansas, Kansas, Oklahoma and Texas – which is likely to set the stage for a major winter storm. .
[NGI’s natural gas price indexes have included trade data from both price reporters and the Intercontinental Exchange (ICE) since 2008. Find out more about our price index data here.]
“It’s a stormy and stormy pattern across the country,” said AccuWeather meteorologist Bernie Rayno.
The forecaster noted that every time an arctic air mass enters Texas, there is concern about snow and ice because at some point warmer air will try to come back. When warmer air collides with that colder air, “you get clouds and precipitation,” Rayno said.
“The other thing you are looking for is if you have energy in the atmosphere towards Texas, and the answer is yes,” he added.
The setup, which is expected to trigger a vast swath of snow and ice, will be brought about by the interaction of the arctic air in place and a warmer, humid air flow from the Pacific that will sweep through Mexico and Texas. .
The grid operator for much of Lone Star State has warned of record energy demand during the multi-day period of freezing cold. The Texas Electrical Reliability Council (ERCOT) said generators have been urged to take the necessary steps to prepare their facilities for the expected cold weather. The checklist includes reviewing fuel supplies and planned outages and implementing weathering procedures.
ERCOT also works with transmission operators to minimize transmission outages that could reduce generation availability or impact the system’s ability to meet demand.
Based on current load forecasts, and if temperatures continue to drop, ERCOT could set a new all-time winter peak demand record on Monday morning. The current winter peak demand record is 65,915 MW, set on January 17, 2018.
The deep freeze sent gasoline prices soaring ahead of the Presidents Day long holiday weekend. Houston Ship Channel spot gas traded as high as $ 225.00 based on midday Friday prices, while pipeline freezes that started to build up in the Permian Basin pushed up prices higher. Waha price up to $ 350.00.
“Over the past year in Texas and Oklahoma, we’ve now had prices ranging from minus $ 10 to $ 600. Incredible, ”said Patrick Rau of NGI, Director of Strategy and Research.
Robert Yawger of Mizuho Securities USA LLC, director of Energy Futures, said it was strange that gas was “offered on the moon” in West Texas / Oklahoma / New Mexico at the same time that oil ” explodes on the rise ”. He noted that there was a great deal of overlap in gas / oil infrastructure in West Texas, although the oil rally could be primarily driven by reports of an attack by Yemen’s Houthi rebels on an airport in Yemen. ‘Saudi Arabia.
“Brent also tore up higher which tends to point to the Houthi angle as the reason for the rally… just speculate, but the gas situation is out of control,” Yawger said.
RBN Energy LLC analyst Jason Ferguson said production from the Permian was down 1.5 Bcf / d day / day on Friday, with larger cuts in the coming days. “Learn more about the total impact over the weekend.”
Meanwhile, sharp price hikes have spread across the country, according to MidDay Price on Friday.
In the Rockies, Cheyenne Hub’s cash has soared to $ 350.00 as overnight lows are expected to drop some 12 degrees below zero in Denver by Sunday.
Soaring heat demand has resulted in rare storage withdrawals at the Aliso Canyon facility in Southern California. Wood Mackenzie said on Friday that Aliso had withdrawn a total of 2.57 Bcf in the past week.
SoCal Citygate spot gas traded at a high of $ 195.00 for the three day gas period.
On the East Coast, where snow and other winter conditions are more common, prices have started to descend from recent highs. Algonquin Citygate spot gasoline was drawn at $ 14.00 on Friday, from the high of $ 16.00 the day before. Transco Zone 6 NY hit $ 7.00, but was on average slightly lower day / day.
Futures in difficulty
Despite their best efforts, futures traders struggled to generate the same level of excitement in the face of the series of end-of-season winter explosions sweeping across the country.
Futures on Nymex were higher on Friday morning as spot prices skyrocketed due to freezing weather, but quickly sold out and turned into the red before noon. The March contract had since pulled back but was well below $ 3.00.
The US and European weather patterns were both a bit warmer overnight. Data from the midday global forecast system was mixed, but maintained the milder trend from February 19 to 24, according to NatGasWeather. What remains a problem for the bullish case, according to the forecaster, is that the 11-15 day outlook remains rather bearish, as mild conditions are currently expected to return to most of the US for much weaker demand.
However, the damage from the current cold spell will have been inflicted as the current excess of 152 Bcf over the five-year average will turn into a deficit of over 200 Bcf in just three weeks, with further increases in deficits likely. follow.
“Essentially the bottom state will be pretty bullish if the supply / demand balance stays as it is and as long as the weather doesn’t get too warm,” NatGasWeather said. “But the price action speaks for itself, and the bulls haven’t been able to get any traction this week as prices continue to fall each time they rally and attempt a breakout. . “
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