Looking very similar to a carbon copy of the previous day’s market, prices fell at a large majority of points (most often by double digits) Tuesday, with the firming exceptions occurring at a few Rockies points. The same influences remained in play: a lack of substantive cooling load for gas in many areas and a continuing slide by August futures.

Not all of the Rockies market was higher, with a few trading points seeing small losses. But with Denver predicted to reach 98 degrees Wednesday and other regional highs in the 90s due, CIG’s gain of about 35 cents led advances by Kern River, Opal and Questar.

Otherwise, softness pervaded a cash market that has little prospect for a turnaround anytime soon. The screen extended its descent that began last Friday by another 17.6 cents Tuesday, with its daily settlement at $5.863 representing the first sub-$6 close in seven months (see futures story).

The market will lose one of its few concentrations of heavy power generation load when a cold front moves in Wednesday to squelch recent record-breaking high temperatures in the northern Plains states. Bismarck, ND, is forecast to go from a peak of 103 Tuesday to 94 Wednesday. Much of the South is still seeing unusually mild temperatures for late July, as Atlanta is slated to top off at 85 degrees Wednesday. Most of the Northeast and Midwest will continue to see highs in the low to mid 80s for a while longer.

A return of Gulf Coast supplies on the Matagorda Offshore Pipeline System that had been expected this week (see Daily GPI, July 20) will be delayed by a few days (see Transportation Notes).

A Midcontinent producer at first said he had “no clue” about why August futures had fallen so far since the week began. Actually he did have a clue. There’s just not much heat in one of the normally hottest months of the year, he said.

The Midcontinent market is feeling additional pressure because heavy rains in recent weeks have strengthened the limited amount of hydropower in the region, and that was cutting into the gas share of power generation load. The flooding also is impeding drilling operations (see related story). A fellow producer had told him he couldn’t get to some of his rigs because of washed-out roads.

“What do you do?” the producer asked rhetorically. Take a lower price or shut in, he guessed. Suppliers that don’t get their sales done early each day have usually found they’re leaving money on the table recently, the producer continued. As far as he knew, none of the Oklahoma utilities were buying gas Tuesday. This market needs “at least two weeks of sustained heat” in widespread areas to get turned around, he said.

A Southern marketer noted that it was “very comfortable” when he went to lunch. Usually, going outside at midday in his area in late July “makes a person miserable” from the high heat and humidity. He said a large part of continuing cash softness is that almost “nobody lives where the real heat is currently.” He explained that most of the high temperatures around 100 degrees or more are concentrated in the relatively sparsely populated desert Southwest and Upper Plains, and the sizzling Plains area was about to be cooled off by a cold front.

The marketer said he was unable to see any price strength in the near future, especially with quite a few storage facilities having little injection capacity left.

Ron Denhardt of Strategic Energy & Economic Research predicts a 69 Bcf storage addition for the week ending July 20. Looking further out, Citigroup’s Tim Evans looks for builds of 71 Bcf, 73 Bcf and 63 Bcf for the weeks ending July 20, July 27 and Aug. 3, respectively. Each of those will increase the year-on-five-year average surplus, Evans noted.

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