Bolstered by Tuesday’s 9.5-cent gain in October futures, cash market averages across most of the country remained in the plus column for the third straight day Wednesday with a vast majority of points adding less than a dime. The recent stretch of price strength has market watchers scratching their heads for answers.

Locations in the Midcontinent and Gulf Coast regions mostly picked up a nickel or less, while price averages in the Rockies and along the West Coast saw more gains in the 5-10 cent range. Price action in the East was a little more of a mixed bag with drops of a few pennies mixed in with gains of less than a nickel.

“I am perplexed as to why prices have remained so strong. No one is buying here,” said a Midcontinent marketer. “For utilities, loads are down, so we are a little bit surprised that prices have moved higher this week. The only thing I can think of is people are taking advantage of sub-$4 gas to inject it into storage. I think the value players are really trying to capture those lower prices for winter gas.”

The marketer said the most surprising thing currently is the relationship between the cash market and the futures screen. “Cash is trading flat to Nymex right now, which normally signals that people should be withdrawing gas, not injecting it. If I was involved in the storage game, I would be withdrawing gas from storage and buying Nymex against it because right now you can buy the gas cheaper next month. However, that’s not happening.”

The Henry Hub added a nickel to average $4.01 on Wednesday for Thursday delivery, while October futures finished Wednesday’s regular session at $4.039, up 5.9 cents.

“Because we continue to see injections despite the lack of a margin to the screen, it tells me that some of the individual portfolios might have gotten pretty low on gas levels in storage, despite what the weekly Energy Information Administration [EIA] reports tell us,” the marketer told NGI. “It has been quite hot this summer in the Midcontinent.”

According to Barclays Capital analyst Michael Zenker, producers are working on adjusting to a $4/MMBtu world (see related story). When it comes to costs and gas prices, “the $4 number popped up many times” at the firm’s recent CEO Energy-Power Conference, Zenker said. Even with prices as low as they are, the imperative is still to grow production, particularly liquids-rich production, the analyst said. “If a company cannot deliver growth through liquids and black oil, it must do so via gas. In other words, investors are still asking companies to grow supply in a gas market that does not need it.”

Heading into Thursday morning’s natural gas storage report for the week ending Sept. 9, most industry estimates are that the EIA will report an addition of between 85 Bcf to 95 Bcf. The number revealed at 10:30 a.m. EDT will be compared to last year’s date-adjusted build of 97 Bcf for the week and the five-year average addition of 79 Bcf.

Checking in on the tropics, Tropical Storm Maria continued to swirl harmlessly 495 miles southwest of Bermuda. According to the National Hurricane Center, Maria is expected to plot a northerly course well offshore the U.S. East Coast.

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