A continuing heat wave in much of the eastern U.S. failed to impress the market Wednesday. It fell at nearly all points as a low-pressure area in the western Gulf of Mexico (GOM) appeared unlikely to disrupt offshore production.
Flat to barely higher numbers at a few points (primarily in the West) averted an across-the-board run of softness in which losses ranged from about a nickel to nearly 35 cents. The Northeast, which had seen Tuesday's biggest gains, recorded Wednesday's biggest declines, although regional peak temperatures were due to remain relatively hot in the low 90s Thursday.
Despite major gains in Nymex's oil product offerings, the cash market will have negative guidance Thursday after the prompt-month gas futures fell another 11.7 cents (see related story).
What the National Hurricane Center (NHC) called "an elongated area of low pressure" over the western GOM was moving to the west-northwest Wednesday afternoon about 300 miles east-southeast of the Texas/Mexico border. It had a 50% chance of becoming a tropical depression before making landfall, NHC said. There were a few reports of offshore evacuations, but the gas market impact appeared to be negligible.
Even with lower overall cash prices Wednesday, a Midwest marketer said his company was still finding a "lot of power plant activity" in PGM territory. He found it difficult to understand why Wednesday prices were so soft when weather remained so hot in the East. "It's just a slight slowdown" in price increases, he surmised.
A bullish storage number could rally prices considerably Thursday, the marketer said, especially since the East Coast apparently will stay pretty hot into the weekend.
It was quite a bit warmer than normal during June, said a Lower Midwest utility buyer, but conditions are "sort of cool right now" because of rain. He didn't expect any major heat increases in his area through the end of the week
IAF Advisors analyst Kyle Cooper said he expects a storage build of 74 Bcf to be reported for the week ending July 2. Credit Suisse's Teri Viswanath expects a slightly smaller addition of 70 Bcf, while Stephen Smith of Stephen Smith Energy Associates looks for a larger one of 78 Bcf.
©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.