Although peak temperatures in the key northern market areas of the Northeast and Midwest are retreating into the low to mid 80s for the most part, it's still way hot way down South (and through much of the Midcontinent and Lower Midwest into the desert Southwest and to some extent in the southern Rockies). Bottom line: the residual heat and prior-day futures support kept cash prices rising moderately at most points Thursday.
The previous day's 9.9-cent increase by August futures also helped boost the cash market to numbers ranging from flat to about a dime higher; only three points manage to surpass single-digit gains. Only NGPL-Louisiana and Transwestern-West Texas saw small losses of 3-5 cents or so.
Prior-day futures support for the cash market is still in effect. After the Energy Information Administration announced a below-expectations 28 Bcf storage build for the week ending July 23, the new prompt-month contract for September faltered for a bit but eventually went up 10.9 cents to $4.827 Thursday (see related story).
Although the southern third of the U.S. is almost alone now in recording hot temperatures, it's doing a pretty good job with readings from the mid 90s to around 100 expected to extend from the South Atlantic coast through the desert Southwest Friday. However, cooling load is only moderate otherwise, with highs expected to extend only into the 70s through the mid 80s in most of the rest of the U.S. and Canada.
Although SoCal citygate volumes traded on IntercontinentalExchange (ICE) took a nosedive from 721,600 MMBtu Wednesday to 266,700 MMBtu Thursday, the citygate price rose a couple of pennies, ICE said. Similarly, Columbia Gas (TCO) trading fell drastically from 819,300 MMBtu Wednesday to 576,500 MMBtu over the same two days, but prices there were up about a nickel, ICE said.
According to ICE, Florida Gas Transmission (FGT) Zone 3 recorded one of the largest production-area gains of a little more than a dime on very small volume after the pipeline further tightened the negative imbalance tolerance for an Overage Alert Day to 10% Thursday (see Transportation Notes).
ICE indicated that most August prices continued to increase Thursday, albeit in significantly smaller volumes than earlier in the week. One exception was border deliveries into SoCalGas at Ehrenberg, where ICE said bidweek prices had fallen about 4 cents.
The Bentek Energy U.S. Natural Gas Hub Flows report showed relatively stable volumes at most points for Wednesday, with many near flat and only a few up or down by more than 10%. Prices showed a similar tendency that day, with single-digit moves up or down dominating the market and flat (or close to it) numbers common. ANR in Louisiana, Niagara and Tennessee Zone 0 saw the biggest flow declines of 16-23%, Bentek said. Northern Natural-demarc and Waha increased volumes the most by 29% and 26%, respectively.
A Midcontinent producer said Bennington Station on Enogex will remain down for maintenance through most of August, which created a bidweek hassle by hindering his company's deliveries to the more lucrative pricing points of NGPL-TexOk and also via Midcontinent Express to Transco Station 85. He found it "very strange" that Midcontinent prices fell over the last week even as Oklahoma temperatures were hitting the mid 90s, which was about as hot as any place in the country, he noted.
The weather is currently warm but it's not extreme heat, a Midwest utility buyer said. However, temperatures should get hotter around Sunday, she added. Conditions are milder now than earlier in July, thanks to some cooling rain, she said.
Gas load is down a bit, and it's "a little slow" on the electric side, the buyer continued. Sales in both areas have been fairly steady, she said, but most of the fluctuations have been in power.
She said the company had hoped that August indexes would fall, but couldn't be too disappointed about only small gains. It got index-flat pricing at Northern Natural-demarc, she said.
There's "some rain" in the forecast, which may loosen the tolerance again on FGT's Overage Alert Day, said a Florida buyer. But she doesn't expect the pipeline to raise the tolerance again until Saturday at the earliest, saying the pipeline wants to keep month-ending imbalances in check. After all, FGT might be trying to work off some excess supply, she said, but it can't let linepack get low when Florida temperatures are staying so hot.
The buyer said she was aware of the Florida citygate often being the top-priced market often this year, but saw some tendency during bidweek to suggest that a little price relief may be on the way because of small August index increases.
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