Despite heat levels due to approach the century mark or higher in much of the southern U.S. and reaching the 90 degree area in the Northeast and Midwest, the cash market shrugged off such forecasts in falling by mostly single-digit amounts Wednesday.
An extended Overage Alert Day by Florida Gas Transmission propelled the Florida citygate to the day's top gain of nearly 35 cents, keeping it by far the most expensive market location, while several other points were flat to about a nickel higher. Overall losses ranged from 2-3 cents to a little more than a dime.
The tropical scene remained quiet, and Tuesday's 3.4-cent drop by August futures had a mildly bearish effect on the cash market. Nymex had more negative guidance for Thursday's spot prices as the prompt-month contract extended its slide by 4.8 cents (see related story).
Warm to hot weather is in the Thursday forecast for much of the U.S. and Eastern Canada, but the West Coast and Western Canada are expected to stay relatively moderate.
The end of a high-inventory OFO by PG&E (see Transportation Notes) allowed PG&E citygate quotes to stay flat, although Malin dropped about a nickel. But although Kern River linepack was dropping below minimum target levels again Wednesday, the pipeline said, prices into Kern River fell a little more than a nickel.
A Midcontinent producer reported it being "very hot here" with heat indexes above 100 degrees and still extremely humid from all the rain and topical moisture lingering from former Hurricane Alex. He said there was lots of demand on intrastates Enogex and OGT due to the heat. He said he had heard Oklahoma Gas & Electric was burning more than 500,000 MMBtu/d Tuesday to generate power for air conditioning.
Enogex has issued a force majeure due to a recent pipeline break it is trying to repair ("but not quick enough!") and it is causing some of his company's production to be shut in, "thus causing us and others to be short this month," the producer said.
A Lower Midwest utility buyer also said it was very hot in her company's service area, which had brought on some additional electric generation load following cooler conditions earlier in the month. The transportation situation was pretty ho-hum with no significant pipeline constraints, she said. Despite Northern Natural Gas barring storage injections until the start of June -- later than other pipes -- the utility is on pace with its refill schedule, she said. Temperatures will stay pretty warm through next week, she added, but will not be "really bad."
Teri Viswanath of Credit Suisse expects an 82 Bcf storage injection to be reported for the week ending July 9, saying, "Our forecast is predicated on the assumption that lower holiday demand will more than offset slightly higher electricity demand resulting from the [week-on-week] rise in cooling degree days." IAF Advisors analyst Kyle Cooper anticipates a slightly larger build of 85 Bcf. And Cameron Horwitz at SunTrust Robinson Humphrey said he had raised his estimate to 83 Bcf after "tweaking on the power generation side."
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