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Temperatures A Mixed Bag; July Called A Penny Higher

July natural gas is set to open a penny higher Friday morning at $2.42 as traders digest a mixed weather outlook as well as indications that the gas market landscape in California might not be as precarious as previously thought. Overnight oil markets fell.

Forecasters are calling for a mixed temperature outlook. "Above-average warmth is expected to expand out of the West into the much of the central and southern U.S. during the six-10 day period," said WSI Corp. in its Friday morning outlook. "Near to below average anomalies will be limited to the Northeast, South Texas and the Pacific NW. [Friday's] forecast is warmer than yesterday's forecast across the Rockies, Plains and Midwest.

"The Northeast and West Coast are cooler. CONUS PWCDDs are down 0.8 to 41.5 for the period."

For the moment, stout power demand in California hasn't caused much difficulty as gas-fired generation and the grid seem to be holding up well. Although real-time power prices Thursday jumped as high as $414/MWh late in the day at SP-15, [with] "the power demand on the grid and the restriction due to Aliso Canyon, the grid seems to be holding up just fine," said EnergyGPS, a Portland OR-based energy consulting firm, in a Friday morning report. "We will see Diablo Canyon return to service this weekend as it is currently ramping up. This will add another 1,150 MW to the grid as baseload energy. On the weather front, it will be hard pressed to get this type of widespread heat again this summer. We will continue to watch the California market as the summer is not over, but for now things look to be in good shape."

Gas buyers in charge of weekend purchases for power generation across the PJM footprint will have only modest wind generation to work with. WSI Corp. said, "A weak cold front will continue to sweep across the Mid Atlantic [Friday] with a chance for showers and storms. A second frontal system will sweep across the power pool during the weekend with the chance for additional showers and thunderstorms. Storms may be strong to severe across the Mid Atlantic. It will become breezy and seasonably cool behind this system with highs in the upper 60s, 70s to low 80s during Sunday through early next week.

"Light and changeable wind generation is expected through early Saturday. Output will fluctuate between 1-2 GW. A west-northwest wind behind the second frontal system will boost wind gen. late Saturday into early next week. Output may top out in excess of 4 GW."

In overnight Globex trading July crude oil slipped 5 cents to $49.12/bbl and July RBOB gasoline shed a penny to $1.6292/gal.

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