Waning cooling load in several areas combined with the previous day's gas futures decline of nearly 23 cents produced losses at most points Wednesday. As they have several times since the beginning of June, the Rockies were conspicuous in going against the grain of the overall cash market with hefty increases up to $1.20.
Other than the Rockies, only a couple of flat to slightly higher eastern points resisted declines that ranged from a nickel to a little more than 35 cents. The largest losses occurred mostly at Northeast citygates, where a cold front was about to enter and take highs back to either side of 80 degrees following several days of peaks in the low 90s.
Even with their spikes while other market areas were falling, Rockies averages were still at basis discounts of nearly $4 or more to most Gulf Coast points.
Temperatures are changing little or rising slightly in the Midwest and the South; both regions are relatively moderate for mid-June.
The Rockies achieved their big upticks chiefly because while hot weather that had buoyed the rest of the West on Monday was receding a bit, localized cooling load was on the upswing. Denver was expected to see a high of 92 Wednesday.
PG&E extended a high-inventory OFO for another day and tightened the tolerance a tad. The PG&E citygate and Malin, which had resisted such normally negative price guidance Monday with advances of more than 35 cents, succumbed modestly this time with losses of about a nickel.
A bulletin board posting by Southern Natural Gas was a reflection of the fast pace of storage refills less than halfway through the traditional injection season. Noting that its storage inventory had reached about 74% of capacity, Southern said it "has seen moderately high levels of injections over the past month and a half and projects that maximum storage capacity could be reached before mid-summer." If this trend continues, the pipeline added, it might be necessary to implement restrictions on certain types of transactions "to preserve firm obligations and interruptible quantities that have already been accepted." See the bulletin board for possible actions that could be taken.
Noting that much of the desert Southwest would be hitting 110 degrees Wednesday and should get to 113 later this week, a regional utility buyer said his company is experiencing higher power demand than usual for June, about 100 MW above average. Such levels will get much higher in July and August, he said. The buyer said he was having no problem in finding gas supplies, although the supply-demand situation has tightened somewhat since the West was awash with gas at times in the last couple of weeks and prices were tumbling.
Heat levels were considerably more pleasant for a Midwestern marketer, who said local temperatures were peaking in the low 80s, and even better, humidity is going down. Locally it should be fairly nice weather through the end of the week, and consequently regional spot gas prices should stay mostly softer, she said. Her company's purchase at the Consumers Energy citygate Tuesday was down 23 cents from the day before, she said.
Analyst Ron Denhardt of Strategic Energy & Economic Research looks for a 104 Bcf storage injection to be reported for the week ending June 15. Going further out, Citigroup's Tim Evans projects gradually declining builds of 91 Bcf, 85 Bcf and 70 Bcf for the weeks ending June 15, June 22 and June 29, respectively.
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