July natural gas futures retreated ahead of the weekend as cooler trends showed up in overnight model runs and again in midday Friday runs. Spot gas prices also declined even as near-term ridging was expected to send temperatures in the eastern U.S. soaring well above normal, albeit very temporarily. The NGI National Spot Gas Average slid 10 cents to $2.51/MMBtu.

The Nymex July contract traded in a tight band of 6 cents before ultimately settling Friday at $2.890, down 4 cents on the day. Steeper losses were seen in the remaining summer months, with August sliding 4.5 cents to $2.894, September falling 4.8 cents to $2.876 and October slipping 4.5 cents to $2.890.

The European weather model showed the most significant changes in the medium range, with a cool shot from the Midwest into the Ohio River Valley and East looking to pull cooling demand around to slightly below average during that time, even as some heat may be able to linger across the South, Bespoke Weather Services said.

It, however, did trend a little hotter for June 19-23, but still not hot enough overall June 15-22 due to the northern U.S. looking mostly comfortable with highs of 70s and 80s, forecasters at NatGasWeather said.

“The big question going into the weekend break is whether the hot ridge over the southern U.S. will shift over the East during the last 10 days of June, which some of the data suggests,” NatGasWeather said. If this scenario were to gain momentum, weather sentiment will trend from neutral-slightly bearish for the third week of June to potentially slightly bullish after. The failure of the ridge expanding across the North and East U.S., however, could lead to disappointment the official summer season would be off to a slow start, the forecaster said.

Cooler forecast trends predicted by the European weather model have called market bulls’ conviction into question and allowed sidelined bears to rebuild positions the past several days, Mobius Risk Group said. In addition to a less bullish weather forecast, the market is also wrestling with preliminary data points that suggest next Thursday’s Energy Information Administration (EIA) inventory report could once again climb above the century mark.

Publicly available storage data indicates that next week’s injection could be as high as 108 Bcf, and although cooler week/week, “this could be a material shift in the net balance calculation,” Mobius said. When taking a deeper dive and looking at the data by region, it appears that injection activity has substantially increased in the upper Midwest and Northeast. As a result, modeled predictions could be overstating the storage build in the South Central region.

“The takeaway here is that a triple-digit storage injection may not be a bearish indicator for hub pricing, but rather a warning shot being fired over the bow of Northeastern producers,” Mobius analysts said.

The EIA on Thursday reported an on-target 92 Bcf build into storage that lifted inventories to 1,817 Bcf and expanded the deficit with year-ago levels nearly 800 Bcf higher. The reported build “was once again indicative of a net supply/demand balance far less bearish than the production growth-only perspective put forth by many market pundits,” Mobius said after Thursday’s market close.

Lower 48 production has been rather stagnant at around 78 Bcf/d as maintenance season continues for another couple of weeks. With no word on the return of Columbia Gas Transmission’s (TCO) Leach Xpress pipeline, which exploded early Thursday morning, traders have also been left to grapple with uncertainty over transport options for getting Appalachian supply to market.

“Though the magnitude and duration of the impact remains uncertain, removal of 1.5 Bcf/d of connectivity to southeastern markets has us thinking volumes are at most flat next week,” Tudor, Pickering, Holt & Co. (TPH) analysts said Friday.

The Leach XPress expansion came online earlier this year to move 1.5 Bcf/d primarily to the Southeast and Gulf Coast. Nearly all of that was impacted by the explosion and fire, prompting reroutes and exacerbating regional takeaway constraints. TPH noted that weak basis indicates “supply appears to be backing up” in the basin.

Volatility was evident as Dominion South and TETCO M3 plunged on Thursday while Columbia Gas unsurprisingly gained more than a dime. But other hubs also were down noticeably as the Appalachian Regional Average settled 17 cents lower on the day to finish at $2.21/MMBtu, according to NGI data.

“This is clearly a reaction to the explosion as export capacity out of the Mid-Atlantic region has been cut substantially,” Genscape Inc. analyst Vanessa Witte told NGI. “While some production will be shut-in, most of the gas will be rerouted from TCO onto other pipes. This means that export capacity out of the region will be more fully utilized and could lead to the region once again feeling constrained with respect to export capacity.”

Meanwhile, the Permian Basin extended its lead in the U.S. rig count, adding three rigs to grow its count to 480, a whopping 30% increase from 368 a year ago, Friday’s Baker Hughes Inc. rig count data showed. According to a more detailed breakdown of that data by NGI’s Shale Daily, four rigs were added in the Delaware Basin, while one was lost in the Midland Basin.

The Permian may be facing oil and natural gas pipeline bottlenecks, as well as a dearth of supplies and labor, but that has not stopped activity levels and investments from increasing, particularly by private operators, according to analysts. Data indicate a strong expansion recently by private E&Ps in an area called the Midland North, which would be in West Texas, where activity has moved into the development phase.

Turning to the spot market, Columbia Gas Transmission spot gas prices stabilized after Thursday’s explosion-related gain, slipping just 3 pennies Friday to average $2.74 after trading in a tight range of 6 cents.

Other Appalachian pricing held steady at most pricing hubs. Dominion South traded at $2.11, unchanged from the previous day. Tennessee Zone 4 Marcellus rose a penny to $1.92, while Tetco M3 Delivery dropped 7 cents to $2.14. The Appalachia Regional Average was down 1 cent to $2.20.

In the Northeast, prices retreated rather significantly even as temperatures in the region were expected to rise during the weekend. NatGasWeather said that warming is forecast to spread across the northern and eastern U.S. through Saturday, with temperatures in the 70s and 80s gaining ground.

Despite the higher temperatures, Genscape projected Appalachia demand to fall to around 6.45 Bcf/d for the weekend before edging back up to 7.12 Bcf/d on Monday, which is still well below Friday’s projected demand of 8.95 Bcf/d. New England demand was expected to slide to 1.40 Bcf/d for the weekend and then rise to 1.60 by Monday, compared with Friday’s expected demand of 2.35 Bcf/d.

At Transco Zone 6-NY, spot gas plunged 45 cents to $2.32. Tennessee Zone 6 200L was down 6 cents to $2.53, while Iroquois Waddington was down 9 cents to $2.57. At New England’s Algonquin Citygate, spot gas tumbled 13 cents to $2.21.

Over in the Rockies, drops of 20-plus cents were the norm amid the lighter weekend demand picture. Opal spot gas averaged $2.19, a drop of a quarter on the day. Northwest Wyoming Pool slid 26 cents to $2.13, and Kern River plunged 25 cents to $2.18.

Meanwhile, spot gas in Louisiana and Texas also retreated, although declines were not nearly as pronounced as vry warm to hot conditions were expected to continue over the central and southern U.S. with daytime highs in the 90s to 100s, including Texas and the Southeast, according to NatGasWeather.

Despite the ongoing intense heat, Genscape expects demand to ease somewhat in the coming days. Friday’s projected demand in Louisiana was expected to reach 4.15 Bcf/d, but by Monday, demand was expected to top out at 3.37 Bcf/d. A similar level of demand was expected for the remainder of the week.

Texas demand was projected to hit 1.83 Bcf/d on Friday and then slide to around 1.36 Bcf/d for the entire June 11-15 work week, Genscape said.

At the benchmark Henry Hub, spot gas fell 7 cents to $2.86, while Southern Natural dropped a nickel to reach $2.82. Houston Ship Channel traded at $2.95, erasing all of Thursday’s gains.

Prices in the Permian Basin collapsed ahead of the weekend, with El Paso Permian plunging 28 cents to $2.04. Waha tumbled 30 cents to $2.09.

California prices fared no better. SoCal Citygate slid 37 cents to 2.41, while PG&E Citygate dropped 12 cents to $2.87.