The cash market advanced on all fronts Thursday, driven by gradually rising heat levels in several areas (not the Northeast, where a cold front was due to keep the region cool) and by support from a futures increase of 8.3 cents the day before.
Gains ranged from 2-3 cents to about 55 cents and were strongest in the Rockies. Conversely, despite serious hot weather in the desert Southwest, most of the smallest upticks occurred in the California, Pacific Northwest, Arizona/Nevada and San Juan (non-Bondad) markets.
A subtropical storm that had earned the moniker of Andrea and caused a little stir in the gas market Wednesday was weakening Thursday and was downgraded to a depression. Its center was expected to remain offshore and the only remaining impact would be to bring some beneficial showers to coastal areas of fire-stricken Florida, The Weather Channel said.
The Energy Information Administration jibed well with consensus expectations in the mid to high 90s Bcf when it reported a storage build of 96 Bcf for the week ending May 4. Though nominally bearish in comparison with historical injections, as usual in recent months, the report had been thoroughly integrated into market psychology. The result was a June futures gain of less than a penny.
Northern Natural Gas provided a clue about how comparatively hot it's getting. Its normal system-weighted temperature at this time of year is 57 degrees, a bulletin board posting said Thursday. It projected these average system readings: 69 Thursday, 64 Friday, 62 Saturday and 68 Sunday.A Gulf Coast producer said he was seeing "just a little bit" more power generation load than before. It's getting hot in the South, he said, but not that much hotter "yet."
A Northeast marketer commented in a similar vein when he said temperatures were rising a bit in the Northeast, but he still was not seeing "all that much" cooling load. But between storage buying and the cooling load that is appearing, he thought prices would continue to go a little higher Friday.
A trader who sells gas for some independent producers in the Gulf Coast said her company was getting about the same buying demand as before, but added that "it's been strong all month." She also noted that prices were rising again in late deals, which had proved an accurate indicator of next-day gains Wednesday.
"We're storing almost as much as we're burning," said a utility buyer in the South. Local highs were rising into the mid to high 80s, but the company was still seeing relatively mild air conditioning load, he said. The buyer attributed that to it being a "kind of in-between period here: you can't leave the windows open, but don't have to run the air conditioner that much."
One sign of Thursday's extra strength in the Rockies came from CIG's being in withdrawal mode from its storage facilities all week, said a western source. The high heat in the desert Southwest, where daily highs are starting to reach and occasionally exceed 100, also created some extra demand for Rockies supply, he said (Rockies prices of less than $4.50 Thursday compared with San Juan Basin numbers around $6.95).
The source noted that the Waha premium to the Permian Basin has been growing, which he said may have been due to Energy Transfer's new pipe going into service in April and increased takeaway capacity from Waha to the east. Waha gas would prefer to head for the more lucrative markets in East Texas than to go north, he said, noting that Waha volumes into Panhandle Eastern have been decreasing.
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