The summer heat blanketing the central U.S. might be keeping air conditioners humming and power loads lofty, but as far as the price of next-day natural gas, not so much.
With rare exception, spot prices at market points across the country only moved within a few pennies of unchanged. The Northeast and Appalachian regions did manage to post average gains of about a nickel, but the NGI National Spot Gas Average was down a penny to $2.56.
Futures trading was equally lackluster, with the August and September contracts moving in opposite directions. At the close, August had added six-tenths of a cent to $2.728 and September had eased three-tenths of a cent to $2.689. August crude oil fell 59 cents to $44.65/bbl.
A fire on a header system upstream of the King Ranch gas processing plant in Kleberg County, TX, had Kinder Morgan employees scrambling to determine the damage to its pipeline facilities Tuesday afternoon (see related story).
"The market impact will depend on the volume, but no one can see that since it is intrastate," said Jeff Richter, a principal with EnergyGPS. "They may be able to reroute the gas to other pipelines since it is probably in a gathering field. If it was 1 Bcf/d it would likely bring a price signal to the market."
Gas for delivery Wednesday on NGPL S TX rose a penny to $2.73, and deliveries on Texas Eastern S. TX were unchanged at $2.72. Gas on Transco Zone 1 was flat at $2.72.
The price movement of South Texas mirrored major market Hubs. Gas at the Henry Hub was unchanged at $2.81, and deliveries to the Chicago Citygate shed 5 cents to $2.77. Gas at Opal was quoted flat at $2.69, and packages at the SoCal Citygate were up a penny at $2.92.
Next-day gas at eastern points slumped on the heels of an unsupportive next-day power market. Intercontinental Exchange reported that on-peak power at ISO New England's Massachusetts Hub shed $3.79 to $30.11/MWh and on-peak power at the PJM West terminal fell $1.69 to $35.45/MWh.
Gas headed for New York City on Transco Zone 6 was quoted 11 cents lower at $1.89.
Analysts see longer-term upward price momentum as a difficult hurdle.
"This market has rotated back up toward yesterday's highs as the temperature factor remains tilted bullish," said Jim Ritterbusch of Ritterbusch and Associates in opening comments Tuesday. "Although there were no major changes in the overnight temperature views, the extreme heat that is expected to move into the Midcontinent region during the next few days will be boosting next-day cash values in the process of forcing a new wide inversion in the front switch ahead of an EIA [storage] report that could possibly offer some bullish surprise if last week's larger than expected injection receives an offset.
"But while the temperature views that are now stretching into the beginning of August still look price supportive, this market continues to experience difficulty in maintaining price strength given evolving bearish non-weather factors. As is the case in the petroleum, an apparent bottoming in the rig counts is conjuring up images of stronger production by next month than had previously been expected."
Weather forecasters call for only minimal relief from ongoing heat. Natgasweather.com in a noon update Monday said, "[T]he weather pattern from the middle of this week into next will become quite hot and uncomfortable. Until then, hot high pressure is dominating many regions of the country with widespread upper 80s to 100s, including into major Northeast cities.
"However, a weather system with showers and thunderstorms sweeping across the Great Lakes and Mid-Atlantic is bringing showers and minor cooling, which will ease Tuesday natgas demand slightly from today. Although hot upper high pressure will strengthen and expand to take ground mid-week with hot and humid temperatures combining to push the heat index to impressive values of 100-113 degrees F over large portions of the central U.S., focused around the Mississippi Valley."