Wednesday, January 12, 2011
Although there are quite a few parts of North America as cold as or colder than the Northeast, that region remained the only one where major heating load was having a substantive impact on prices. At nearly all other locations moderate softness was returning Tuesday.
It was hard to say definitively why a strong blast of winter cold is having such a mild price effect, but one source suggested that it could be a case of moderating forecasts for the latter half of January combined with buyers using more storage now in hopes of buying that supply back more cheaply, if necessary, when anticipated warm-ups were likely to lower prices.
The market also saw some downward pressure from relaxed concerns about wellhead freeze-offs that had failed to occur as feared in some areas.
Bentek Energy analyst Dan Fox said he could find no evidence of anticipated Rockies wellhead freeze-offs in either anecdotal evidence or his sample production numbers. There was freeze-off "potential" amid such frigid conditions, he said, but none happened as far as he knew. He also noted that several pipes have started to lift their cold weather restrictions, such as El Paso saying its probability of declaring a Strained Operating Condition due to excess linepack was high.
After recent minuscule negative guidance, the cash market will get some support from Tuesday's February futures gain of 8.2 cents.
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