Forecasts of Thursday temperatures near 90 or higher in much of the eastern U.S. and extending into the Rockies still had little effect on boosting spot prices Wednesday. And a potential tropical storm threat to Gulf of Mexico production had faded by late that afternoon.
Quite a few scattered flat to a little less than a nickel higher locations were the exceptions to overall losses ranging from 2-3 cents to a little more than 15 cents. A large majority of declines were in single digits, while the Northeast tended to take most of the bigger price hits.
September gas futures managed to break a recent string of weakness in eking out a small gain of 2.9 cents despite tumbling prices in the rest of Nymex's energy futures complex (see related story).
Offshore producers apparently were justified in not fearing much effect on their operations from Tropical Depression 5 (TD5), which formed overnight in the eastern Gulf of Mexico and was expected to make landfall as a tropical storm near the Louisiana-Mississippi border late Thursday. However, the National Hurricane Center (NHC) said TD5 had dissipated as of late Wednesday afternoon.
Meanwhile, a low-pressure system about 700 miles northeast of the northern Leeward Islands had become less organized but still had a 50% chance of becoming a tropical cyclone during the next 48 hours, NHC said. It did not expect significant development of a tropical wave about 350 miles east of the Lesser Antilles, giving it low odds (10%) of reaching cyclone status over the following 48 hours.
Before TD5 had faded, Anadarko reported removing personnel that were nonessential to operations from its operated Independence Hub and Neptune facilities in the eastern Gulf of Mexico Tuesday evening. "We are continuing to monitor the path of the weather and remain prepared to immediately remove all personnel from these facilities and shut in production, if necessary, to protect our personnel and the environment," the producer said.
In a hotline posting Tuesday, BP said it was in Phase 2 preparations for a potential hurricane, but only nonessential personnel were being evacuated at that time.
Other than Tennessee's mild Imbalance Warning in its farthest two downstream zones, significant pipeline restrictions were almost nil.
Hot weather would continue to dominate the forecast for Thursday, but parts of the Midwest and Northeast along with the West Coast and Canada were due to peak only in the mid 80s or considerably lower.
Prices started low Wednesday and went up for a while before falling again, a Midcontinent producer said. He professed surprise that the heat (reaching the 100 area in much of his region) wasn't pulling up gas prices any more than it did. He said there were still some transport problems on Enogex, which prevented his company from taking gas out of Oklahoma via that intrastate. OGT is commanding some of the state's lower prices recently, he said. He was "not sure of any potential rally" before next week at the earliest.
A Texas-based marketer went even further in saying he doesn't look for any price rebound before Labor Day. Other than an outage of Tennessee's Station 325 in the Northeast through Friday, which he characterized as "no big deal," he was unaware of any substantial transport problems. Noting FERC's announcement of monitoring recent price spikes at the Florida citygate, he said his company avoided that market for the most part during the spikes.
Another Midcontinent producer noted that while regional prices were still averaging above $4 Wednesday, he thinks "we'll see a $3 handle by this weekend." It was still "very hot here," but temperatures were expected to be below normal next week ("meaning the lower 90s!").
The National Weather Service (NWS) expects above-normal temperatures during the Aug. 16-20 workweek throughout the West Coast states extending into the western Rockies, then dipping through most of the desert Southwest into the southern two-thirds of Texas, and also everywhere east of a line extending from Arkansas through eastern Michigan. In its six- to 10-day forecast posted Tuesday afternoon, NWS looks for below-normal readings in the Upper Plains and western Midwest extending as far south as northern Kansas.
Credit Suisse analyst Teri Viswanath expects a storage injection of 38 Bcf to be reported for the week ending Aug. 6. Kyle Cooper of IAF Advisors anticipates a slightly lower volume of 36 Bcf. While acknowledging that other analysts are calling for higher numbers, Citi Futures Perspective's Tim Evans said he is sticking with his projection of a 30 Bcf build in Thursday's report, to be followed by injections of 36 Bcf and 42 Bcf for the weeks ending Aug. 13 and Aug. 20, respectively.
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