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Most Prices Higher, But Cooling Northeast Plunges

In a general reversal from the previous day, Northeast citygates plummeted Thursday while nearly all of the rest of the market recorded sizeable upticks. Heat levels were due to stay high from the desert Southwest through the Midcontinent and South into the Mid-Atlantic. And it wasn't much, but a 1.6-cent futures increase a day earlier provided a wee bit of support.

Whereas near-flat numbers had dominated the previous two trading days, only ANR ML-7 was still flat Thursday. Most other locations saw gains ranging from about a nickel to a quarter. Nearly all of the losses from about a nickel to nearly $1.75 occurred at Northeast citygates.

While Transco Zone 6's New York pool had posted Wednesday's largest quote by far in topping out at $9, it could only reach $5.81 Thursday. It was still the most expensive trading point in averaging about $5.60 but was closer to easing back into overall Northeast price levels.

The Energy Information Administration's announcement of an 80 Bcf addition to storage during the week ending June 3 was slightly above consensus estimates in the upper 70s Bcf. Although the report fell short of comparable year-ago and five-year average volumes, Nymex traders took it bearishly in pushing July futures 17.3 cents lower (see related story).

Highs were predicted to remain in the 90s Friday for much of the southern half of the U.S. But a cold front accompanied by thunderstorms will be cooling off the former sizzling Northeast, with peak temperatures shrinking back to the 90 area in New York City and Philadelphia and to the mid 70s in Boston.

Although heat levels have subsided greatly in upper sections of the Midwest, they remain rather onerous in the region's southern reaches. MRT's bulletin board reported that as of mid-morning Thursday the 87-degree reading in St. Louis had a "real feel" of 102. The St. Louis thermometer level at that point was hotter than the 84 each in the more southerly climes of Shreveport, LA, and Houston reported by MRT affiliate CenterPoint.

It was a status quo forecast for the West: very hot in parts of the desert Southwest and mild to cool elsewhere in the region.

One factor supporting quotes in the Southwest supply basins was El Paso saying it was working to maintain higher linepack along its South System in anticipation of potential higher loads that might occur "as a result of a shift in power plant operations across southern Arizona and New Mexico due to the forest fire in the White Mountains (Wallow Fire) in eastern Arizona." While encouraging customers to ensure that their flowing gas is aligned with scheduled supplies, El Paso emphasized that its own pipeline facilities were not directly impacted by the fire. It was reporting normal system linepack Thursday.

If any coal train shipments through the Upper Plains and/or Midwest get interrupted by Missouri River flooding, it could eventually have implications for increased use of gas-fired generation. But that's a doubtful supposition since coal power plants generally keep a few months' worth of supply stockpiled on-site.

A spokesman for BNSF Railway noted that its website is posting locations of several flooded subdivisions in the Upper Plains/Midwest through which its trains run, but he was unaware of any BNSF coal shipments being interrupted. The company is building additional dikes and armoring track roadbeds with riprap (boulder-size rocks) where it has the best chances of protecting against flooding, he said, and will reroute trains as much as possible to avoid potential outage areas elsewhere.

A Midwest utility buyer said the Missouri River had reached flood stage along much of its length and was still rising, but although some residents along the river have been forced to evacuate their homes, he didn't think any gas or electric utility operations in the area have been affected. He said he also was unaware of any coal trains being unable to reach Midwest plants due to flooding of railroad tracks near the river.

The buyer said his company had plentiful power generation load during the first three days of the week, but a cool front moved in Wednesday and squelched a lot of that. There was not nearly enough cold to create any heating demand, though, he added. The buyer said area conditions should stay on the cool side through the weekend, then start warming back up into the 80s early next week.

A Rockies producer said price strength there Thursday was a bit surprising, considering there was no local cooling load left and much less than before in the Midwest. However, he suggested, traders may have been thinking about Sumas supplies into the Pacific Northwest getting tighter as Westcoast implements 67% turnaround constraints Friday at the McMahon Gas Plant that are scheduled to run through Wednesday. (Sumas and Westcoast Station 2 saw price gains of about 15 cents and C25 cents, respectively.) He didn't expect increases to continue Friday due to Thursday's storage report-induced big Nymex drop and weather-based demand staying low.

The producer reported being "amazed" that with major hydropower supplies in the West just starting to come on strongly, the CIG-Henry Hub basis spread was still relatively small at about 33 cents. But he expected that much like last June, the spread will be widening fairly soon to a dollar or more.

In a possible signal of waning overall demand, Bentek Energy's U.S. Natural Gas Hub Flows chart found declines in nominated volumes for Thursday at 11 of the 23 key trading points it covers. Three locations were flat and the other nine were up, Bentek said. Three points recorded major increases: Texas Eastern M-3, up 146,000 MMBtu (5%); the PG&E citygate, up 125,000 MMBtu (5%); and Waha, up 112,000 MMBtu (22%). Two had big dips: the Florida citygate, down 138,000 MMBtu (4%); and Transco Zone 4, down 101,000 MMBtu (4%).

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