Prices dropped across the board Friday as forecasted weekend temperatures were not enough to sustain further firmness in the cash market. Instead, Thursday's prompt-month futures dip of 13.9 cents, along with the usual weekend decline of industrial load, proved to be stronger influences on physical quotes.
Only three Western Canada locations saw losses of less than a dime as numbers fell from about C5 cents to nearly 35 cents at nearly all points. Once again the Florida citygate was a distant outlier from the rest of the market in plunging by about $1.50, despite Florida Gas Transmission keeping an Overage Alert Day in effect through at least Friday (see Transportation Notes).
Peak temperatures were destined to remain in the mid 80s to 100 area in most areas from the Rockies eastward, but the Northeast was a key market area where mercury levels were expected to fall significantly.
Monday's cash market will continue to have negative support from futures after the August contract nearly duplicated Thursday's performance in falling another 13.1 cents Friday (see related story).
The National Weather Service predicts that above-normal temperatures will continue to prevail in most of the eastern half of the U.S. (except for New England and the eastern half of New York, where normal conditions are expected) through the end of this week. The agency anticipates below-normal readings throughout the Pacific Northwest and the western two-thirds of California.
After rising about 6 cents Thursday, prices into Columbia Gas plunged by more than 20 cents Friday, IntercontinentalExchange (ICE) said, as pipeline volumes traded on its online platform also took a dive from 908,600 MMBtu to 706,400 MMBtu.
However, although prices also fell about 20 cents at the Chicago citygate, ICE said activity there increased from 450,900 MMBtu Thursday to 561,300 MMBtu Friday.
Waha took by far the largest percentage drop (29%) in nominated flows for Friday, dropping 95,000 MMBtu to 234,000 MMBtu, according to Bentek Energy's U.S. Natural Gas Hub Flows report. The next biggest decline of 19% occurred on ANR in Louisiana, where Friday volumes were down by 171,000 MMBtu to 748,000 MMBtu, Bentek said.
A Midcontinent producer said he was surprised by a relatively low storage injection report Thursday (he was expecting a 34 Bcf build instead of the actual volume of 29 Bcf) because "all regions were cooler and there were less CDDs" (cooling degree days). But the Producing Region once again having a withdrawal (down 8 Bcf) for the second week in a row seemed a bit odd to him. However, he figured cash prices must have gotten too high, "making it cheaper to pull from storage." The volumes [storage inventories] are certainly there, he said.
In addition to high storage levels, Oklahoma intrastate pipes are saying they are getting record gathering volumes lately, the producer continued.
After getting to near parity with Gulf Coast price following the completion of Rockies Express, Rockies prices are back to their former depressed state, said a regional producer, who noted that CIG basis relative to Henry Hub was about negative 95 cents Friday. It's been cooler than usual in California, which has diminished demand for Rockies gas there, he said, and increasing flows from Western Canada have also displaced some of the domestic product, he said. It's not a case of inadequate pipe capacity causing low Rockies prices now but just less load in the West, he added.
A Midwest utility buyer said local temperatures were only moderately warm Friday but would be getting much hotter in the coming week, rising into the upper 90s. Her company is expecting some increases in power generation load but it would not be as much as it used to experience as some area generators have increased their coal-fired capacity in the last year or two.
After falling by 10 in the previous week, the Baker Hughes Rotary Rig Count of units seeking gas in the United States went back up by 11 to 983 during the week ending Aug. 6, hitting its highest level since February 2009.
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