The upgrade of a tropical wave in the southern Bahamas to Tropical Depression 3 (TD3) was almost a given during cash business Thursday, but it didn't seem to impress traders. Neither did a heat wave forecast for the South and highs reaching the low to mid 90s in parts of the Midwest and Rockies.
The result was modest declines of 2-3 cents to a little more than a dime in most of the cash market, largely influenced by the prior-day futures retreat of 7.7 cents. Other locations were flat to about a nickel higher.
Florida Gas Transmission extended an Overage Alert Day into its 16th consecutive day Thursday. Whether the $1.50 dive at the Florida citygate was substantive was in doubt because only one deal was reported there. Meanwhile, a high-inventory OFO by PG&E (see Transportation Notes) was only a mild depressant to PG&E citygate and Malin numbers, which fell only about a nickel each on the IntercontinentalExchange (ICE) platform.
The Energy Information Administration was directly in line with analysts' consensus estimates in reporting a 51 Bcf addition to storage during the week ending July 16. Nymex traders had a moderately bullish reaction in sending August gas futures 13 cents higher (see related story).
Beside upgrading the tropical wave status, the National Hurricane Center projected that TD3 would quickly traverse the Florida Keys area (where weakening effects from land traversal would be relatively minimal) and be well into the eastern Gulf of Mexico (GOM) by Saturday afternoon and situated just off the southeast shore of Louisiana about 24 hours later. Of course, that represents passage through the heart of GOM production infrastructure, not to mention disrupting BP's efforts to contain the Macondo well oil leak.
The Bureau of Ocean Energy Management, Regulation, and Enforcement (formerly Minerals Management Service) had a short answer when asked if it had gotten any evacuation and/or shut-in information: "None reported today." However, BP said it had joined Shell Thursday in beginning to evacuate nonessential personnel, emphasizing that it was reporting only for its eight operated GOM platforms. The company was in Phase 2 of hurricane operations, securing facilities and evacuating workers nonessential to production, and will not send out anyone else until the storm has passed, a hotline message said.
Offshore pipeline operator Enbridge said it plans to evacuate 20-30 nonessential (cleaning, maintenance, etc.) personnel Friday, but operational employees will remain until the company takes them ashore for safety reasons, said spokeswoman Terri Larson.
Marathon posted on its website a late-afternoon Reuters report that the producer was preparing to pull 15 people off its Ewing Bank 873 platform, although the facility would continue to operate for the time being.
ExxonMobil spokeswoman Margaret Ross said the oil and gas giant is closely monitoring the weather, but as of Thursday afternoon it had not evacuated any nor shut in any production.
Transco Zone 6-New York volumes traded on ICE dropped more than 100,000 MMBtu, from 446,000 MMBtu Wednesday to 339,500 MMBtu Thursday. The price average there fell about 4 cents to $5.17, ICE said.
Meanwhile, although the Katy Hub near Houston saw a similar drop of about a nickel, Katy trading on ICE jumped from 578,000 MMBtu in 80 transactions Wednesday to 668,300 MMBtu in 103 transactions Thursday.
Tennessee Zone 0 in South Texas saw a whopping 66% increase to 358,000 MMBtu in nominated flows for Thursday's gas day, according to Bentek Energy's U.S. Natural Gas Hub Flows report. The next biggest percentage increase was 36% (by 275,000 MMBtu to 1,049,000 MMBtu) at the MichCon citygate, Bentek said. Chances are good for further MichCon flow upticks as the Detroit-area high is expected to climb from the mid 80s Thursday to around 93 Friday.
ICE reported that MichCon was among the minority of rising points Thursday with a gain of about a nickel.
Waha, with flows dropping by 30,000 MMBtu to 60,000 MMBtu, or 33%, was the only point to record a volume decline of more than 12% (Texas Eastern M-3), Bentek said.
Much of the South can expect peak temperatures from the 90s to just above 100 Friday, but the major cooling load had little impact on mostly slightly softer Gulf Coast prices. The Northeast will be cooling slightly, while the Midwest goes a few degrees in the opposite direction.
Noting that August futures closed above the 20-day moving average, which he said is the first such close since June 28, a Midcontinent producer predicted that further trading of this sort will cause the August contract to test the $5 level before next Wednesday's expiration. Above-normal temperatures in many areas still dominate the six- to 10-day forecast, he said, but may be tempered a bit by moisture from TD3 (or possibly Tropical Storm Bonnie) this weekend.
The producer said his company has done little in August baseload trading so far, but is seeing Enogex trade at a premium to OGT as usual for intrastate Oklahoma power generation load.
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