The spot market continued to rely on significant heat levels for early June and prior-day futures strength in rising at all points for a second straight day Friday. Thursday’s report of a slightly below-expectations storage injection, which came out too late to impact most of that day’s cash trading, was an extra impetus for the price gains despite the typically lower industrial load during a weekend period.
The Friday market was close to a repeat of Thursday’s, with double-digit upticks dominant among gains ranging from about a nickel to a quarter or so.
July natural gas futures defied a major downturn in the rest of Nymex’s energy complex Friday, turning in an increase of 10.7 cents on the day (see related story).
Midweek cold fronts had dissipated for the most part, and although highs in the low or mid 80s or lower would persist into the weekend through the northern tier of states and in much of Canada and the West Coast, peaks in the 90s were returning in the lower half of the U.S. Desert Southwest locations such as Phoenix could expect 100-plus readings.
Baker Hughes reported that the number of drilling rigs searching for natural gas in the U.S. dropped by 20 to 947 during the week ending June 4. Five rigs were deactivated in the Gulf of Mexico, Baker Hughes said, while the onshore tally fell by 15.
Temperatures in the Rockies have gotten warmer since earlier in the week, a regional producer said, but his company hadn’t seen any significant increase in power generation load. Although he was pleased by Rockies prices exceeding $4 again, he said the CIG basis discount of more than half a dollar from Henry Hub was rather disappointing after the two points had been trading near parity earlier in the year. Despite reports of low hydropower levels in the Pacific Northwest this years, he doesn’t expect them to result in substantial increased demand for gas until late summer at the earliest.
There’s a little bit of heat in California, “but not that much,” a western trader said. He doesn’t expect any high-linepack OFOs by the state’s major utilities like the ones that dominated the Memorial Day period to recur this weekend.
“It was just a matter of time before someone was brave enough to take on the political battle it may entail,” the North American Terminal Survey (NATS) by Pan EurAsian Enterprises said in a commentary Friday, referring to the announcement by Cheniere Energy that it will add about 7 million metric tons per year of liquefaction capacity to its Sabine Pass liquefied natural gas (LNG) terminal in southwestern Louisiana (see related story). Cheniere will make the associated Creole Pass Pipeline bidirectional and market LNG to the world from U.S. domestic production sources, NATS said.
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