As many traders had anticipated, Wednesday afternoon’s dime-plus uptick in natural gas futures translated into strong cash gains at most points Thursday. However, prices again deteriorated greatly in the capacity-constrained San Juan Basin, which was joined in its softness by Rockies pipes as supplies backed up there, largely unable to get to California and east-of-California markets via El Paso.

Although softness could continue Friday in the Rockies/San Juan market, sources expected weekend prices to keep rising at other points after a bullish storage report propelled the screen to an advance of nearly a quarter Thursday. The EIA said 37 Bcf had been injected last week, which was below the most common range of 40-50 Bcf of prior expectations. Once again most cash business had already been completed by the time Nymex began its climb, so its impact on the physical market will be delayed until the following morning, they said.

A Northeast utility buyer echoed one in the Midwest in saying they don’t want higher prices but were resigned to paying them Friday. “The screen spike will carry cash higher,” said the Northeast source, although she was hopeful that the normal weekend drop in industrial demand would keep any increases moderate. There certainly is nothing to support bullishness in the weather forecast, she added, reading a list of projected high temperatures hovering on either side of 80 degrees through the middle of next week.

Besides looking for higher weekend prices, the Midwest utility buyer said she expects them to remain strong through the rest of August.

A marketer, who saw Chicago citygates mostly in the low to mid $3.20s before a late jump to the upper $3.30s, said things where quiet until the storage numbers came out and then “some extra players came into the market” and appeared to make storage purchases.

Permian Basin and Waha prices felt some “pretty strong” intrastate demand in Texas because of the heat, a marketer said.

A Southwestern utility buyer appreciated the bargains to be found in El Paso’s San Juan-Bondad pool, reporting numbers falling from the mid $1.40s early to the mid $1.20s late, although he said there might have been a small pop back up after he completed his purchases. El Paso’s maintenance was cutting North Mainline capacity through the basin, he said, but another factor was weak demand. He pointed out that triple-digit temperatures in the desert Southwest region are considerably less widespread now than they had been for much of the summer.

A marketer said he found it “hard to see how prices this high can keep on rising” in the face of generally bearish weather load and bulging storage inventories, but he had to assume they will based on the futures spike. But a Canadian producer chimed in that he thinks it’s a slowly growing crunch in supply deliverability “that makes people discount how close to full storage is. Once it’s full, it’s full; we might see some downward pressure on prices as the end of injection season approaches, but then it’s a whole new ball game in November.

The producer quoted intra-Alberta numbers rising along with the screen from the high C$3.00s to the high C$3.10s. The futures strength also was reflected in September prices, he said, which went from the high C$3.50s in the morning to the C$3.70 area in the afternoon.

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