Place gas prices in the Midcontinent, often the cheapest in the lower 48, rose to $ 600.00 / MMBtu on Friday as snow, ice and freezing temperatures saturated the region.
Oneok Gas Transmission, also known as OGT, has been on the rise in recent days as a train of winter storms began running across the United States. Earlier this week, the Oklahoma Point traded in the $ 3.00 range. By Friday, no transaction under $ 125.00 had been executed.
According to AccuWeather, the temperature is forecast to drop to record levels in the 20s, teens and even the singles figures by Saturday night in records from Arkansas, Kansas, Oklahoma and Texas, and this 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, stormy pattern across the country,” AccuWeather meteorologist Bernie Rayno said.
The forecaster noted that when an Arctic air mass moves into Texas, there is concern about snow and ice, because at some point, warmer air will try to return. When warmer air collides with that colder air, “you get clouds and precipitation,” Rayno said.
“The other thing you look at is if you have any energy in the atmosphere to Texas, and the answer is yes,” he added.
The setup, which is expected to cause an extensive amount of snow and ice, will be caused by the interaction between the Arctic air and a flow of warmer and more humid air from the Pacific Ocean that enters Mexico and Texas.
The electricity grid operator for most of the Lone Star State has warned about the record demand for the multi-day bitter cold. The Electric Reliability Council of Texas (ERCOT) said generators are being asked to take the necessary steps to prepare their facilities for the expected cold weather. The checklist includes the review of fuel supplies and planned outages and the implementation of winter weathering procedures.
ERCOT also works with transmission operators to reduce transmission interruptions that may reduce the availability of generation or otherwise affect the system’s ability to meet demand.
Based on the current load forecast and if temperatures continue to drop, ERCOT could set a new record demand record in the winter on Monday morning. The current winter record demand record is 65,915 MW set on 17 January 2018.
The freeze has pushed up gas prices ahead of the long Presidential Day holiday weekend. According to Hospitals of the Houston Ship Channel, it traded at $ 225.00 on Friday according to MidDay prices, while the freezing pipes of pipelines that began to accumulate in the Perm basin raised Waha prices to $ 350.00.
“Over the past year in Texas and Oklahoma, we have had prices ranging from minus $ 10.00 to $ 600. Incredible,” said Patrick Rau, director of Strategy & Research, at NGI.
Robert Yawger, director of Energy Futures, of Mizuho Securities USA LLC, said it was strange that gas “to the moon” in West Texas / Oklahoma / New Mexico at the same time “exploded upside down”. He noted that there is a lot of gas / oil infrastructure overlapping in West Texas, although the oil rally could be driven mainly by reports of an attack by Jouth’s Houthi rebels on a Saudi Arabian airport.
“Brent also tore higher, which tends to point to the Houthi corner as the reason for the rally … just speculating, but the gas situation is out of order,” Yawger said.
Jason Ferguson, an analyst at RBN Energy LLC, said Perm’s production was less than $ 1.5 billion a day in the day, with deeper cuts likely in the coming days. “I will know more about the full impact this weekend.”
Meanwhile, sharp price increases have spread far and wide across the country, according to MidDay Prices on Friday.
In the Rockies, the cash from Cheyenne Hub jumped as high as $ 350.00, as it was predicted that the lowest overnight against Denver Sunday would tumble about 12 degrees below zero.
The increase in heating demand has led to rare withdrawals at the Aliso Canyon plant in Southern California. Wood Mackenzie said Friday Aliso withdrew a total of 2.57 BCF in the past week.
SoCal Citygate’s spot gas traded at a high of $ 195.00 during the three days.
On the East Coast, where snow and other winter conditions are more common, prices have recently peaked. Algonquin Citygate coal gas tapped $ 14.00 on Friday, up from the high of $ 16.00 the previous day. Transco Zone 6 NY achieved $ 7.00, but was an average of a lower day / day.
Struggling future
Try as you please, future traders have struggled to arouse the same amount of excitement about the late-season winter explosions taking place across the country.
Nymex’s futures contract was higher on Friday morning as cash prices soared during icy weather but sold quickly and moved into the red before noon. The March contract has since moved back higher, but was below $ 3.00.
The American and European weather models were a little warmer overnight. The data from the Global Forecast System afternoon were mixed, but according to NatGasWeather, the lighter trend was for February 19-24. What, according to the forecaster, remains a problem for the bullish case is that the outlook for 11 to 15 days is rather bleak, as mild conditions are currently forecast to return across most of the United States for much lighter demand. .
However, the damage due to the current cold outbreak will be inflicted as the current surplus of 152 Bcf to the five-year average will rise to a deficit of more than 200 Bcf in just three weeks, with further increases in the deficits likely to follow .
“In essence, the background situation will be quite clumsy if the supply / demand balance remains as it is and as long as weather patterns do not get too hot,” NatGasWeather said. “But price action speaks for itself, and bulls could not get a traction this week because prices are still being lowered every time they pull together and try to make a breakthrough.”