Despite the pre-holiday weekend drop of 16.7 cents by August futures, prices recorded gains across the board Tuesday that were mostly in double digits. Although an early-week heat wave along the East Coast was due to start receding a bit Wednesday, temperatures would remain pretty warm, and one source suggested that end-users and utilities may have bought extra gas to make up for imbalances caused by highs that neared 100 Monday and Tuesday in such places as New York City.
The possibility of another tropical storm brewing in the southern Gulf of Mexico and the return of industrial load from the extra slump associated with a holiday weekend also contributed to cash firmness.
Upticks ranged from a couple of pennies to a little more than 60 cents, with Transco Zone 6's New York pool claiming the top gain. Although Northeast heat was due to start backing down Wednesday from the scorching levels it reached as the week began, that region saw the day's biggest increases by far.
The cash market will have essentially neutral screen guidance Wednesday after Nymex's natural gas contract spent much of Tuesday a bit firmer but finished down half a cent (see related story).
Strength in western prices was generally unfazed by forecasts of Wednesday highs barely above 70 in the Rockies and a high-inventory OFO declared for Tuesday and Wednesday by PG&E (see Transportation Notes). Despite the OFO, Malin and the PG&E citygate rose nearly 15 cents each.
With few locations getting much above either side of 90, the South is seeing relatively moderate weather for early July at this point. And the Midwest is relatively balmy with peaks mainly in the low to mid 80s.
Although a low-pressure area over Mexico's northern Yucatan Peninsula and the south-central Gulf of Mexico was accorded only a medium (30%) chance by the National Hurricane Center of becoming Tropical Storm Bonnie anytime soon, the agency said environmental conditions appeared "marginally conducive for slow development" as the system moved west-northwestward.
It's "hot but not oppressive," said a utility buyer in the South, but there was "decent" air conditioning load for his company. Forecasts called for a chance of rain in the area Tuesday but it didn't happen, he said, so local conditions should stay hot and dry through at least the end of this week. The utility is still getting 10% cuts on nominated supplies via Panhandle Eastern due to Midcontinent compressor station maintenance, he said; "that won't keep us from filling storage, but it is slowing us down [on injections]."
A Midwest marketer said local conditions were hot, but the humidity had not gotten "bad -- yet." Her company put off buying spot gas for Wednesday because of the price gains and will try to wait it out for lower numbers later this week. The tropical storm potential was the only reason she could discern for Tuesday's significantly higher prices.
The National Weather Service (NWS) looks for above-normal temperatures during the July 12-16 workweek throughout the Northeast and Mid-Atlantic as far south as northeastern North Carolina and as far west as the eastern reaches of the Midwest. Its six- to 10-day forecast posted Tuesday afternoon also predicts above-normal readings everywhere west of a line running southward from central Montana and Wyoming along the western edge of Colorado into eastern Arizona. The only area where NWS expects below-normal conditions is in an area from the western edge of the Dakotas through Wisconsin and extending southward into the northern halves of Kansas and Missouri.
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