Prices rebounded by generally small amounts in most of the market Wednesday as the South is beginning to contribute more air conditioning load than earlier this week and is being abetted to a smaller degree by warming trends in the Midwest. The previous day's screen gain of 3.9 cents also gave a modicum of positive guidance to cash numbers.
The bulk of cash price averages were flat to only about a nickel higher. Once again the Florida citygate was a wide market outlier in spiking by about 40 cents as Florida Gas Transmission continued an Overage Alert Day.
Most of the moderately softer locations were concentrated in the Rockies, Western Canada and Southwest basins, where quotes fell from a couple of pennies to about a dime.
In early trading it appeared that September futures might continue to lend modest support to the next-day cash market, but after being up by a small amount for a while the prompt-month contract slumped to a loss of 2.8 cents on the day (see related story).
Peak temperatures were due to stay fairly torrid Thursday from Texas and Oklahoma through the desert Southwest, and highs in parts of the South were expected to begin seeing the mid 90s again following a relatively moderate start to the week. The Midwest was not expected to approach those levels, but a warm front entering the region would take top readings into the upper 80s at such locations as Chicago and Omaha, NE. Mild weather was predicted to continue dominating the forecast in most other areas.
A tropical wave moving westward at 15 mph had reached the west-central Caribbean Wednesday, the National Hurricane Center (NHC) said. However, there were no signs of development, the agency said, and it continued to report low odds (10%) of the wave becoming a tropical cyclone in the succeeding 48 hours. No other significant tropical activity was being detected in the Atlantic, NHC said.
No production or processing figures were available after a producer said it had shut in "substantially all" of its East Texas oil and gas output due to the outage of a processing plant in Myrtle Springs, TX (see related story).
After seeing Tuesday's biggest losses of 17-20 cents, the Southern California market was recovering to a modest degree despite cooling load remaining fairly scarce on much of the SoCalGas system west of the interior desert. Quotes at the border and SoCal citygate were up by about 2 cents each.
The SoCal rebound did not carry over into the Southwest production basins, where a fair amount of gas had previously been reported as eastbound to supply power generation load in the south-central U.S.. That activity may have been waning, as IntercontinentalExchange (ICE) reported Wednesday's biggest price drops of a nickel to a dime in El Paso's Waha, Permian and two San Juan pools.
ICE said Iroquois Zone 2 volumes traded on its system took a big percentage jump from 67,400 MMBtu Tuesday to 115,300 MMBtu Wednesday, but prices rose only about 3 cents or so.
Meanwhile, Opal deals totaling 642,000 MMBtu a day earlier shrank to 511,700 MMBtu Wednesday as prices there fell about another couple of cents, ICE said.
Rockies Express deliveries at the Big Muskie interconnect with Tennessee will be allowed to resume Friday (see Transportation Notes).
The most intense U.S. heat wave of the year is continuing east of the Rockies, said an advisory Wednesday by New York City-based Weather 2000. This counters analogs that said the first half of August would be hot for the Southwest ("but it was normal)" and cool for the deep South ("but it was hot"), the consulting firm said. It added that Dallas was targeting 21 straight days of exceeding 100 degrees, while Jacksonville, FL was close to setting a new record with 45 straight days of more than 90.
On the other hand, coastal Southern California is having its coolest summer in more than 40 years, Weather 2000 said.
Southern Natural Gas reported that as of Aug. 11 it was way behind last year's storage refill pace. Last week it had reached 45.5 Bcf, or 76% of total working capacity of 60.0 Bcf at two facilities, the pipeline said. That compared to 56.4 Bcf (94%) on Aug. 13, 2009. However, current injections are slightly ahead of the 44.4 Bcf (74%) recorded Aug. 14, 2008.
To a Midcontinent producer, transport capacity "seem to be becoming more and more of a problem for this market." A possible factor may be shrinking storage injection space requiring increasing amounts of gas to remain on the pipes. OGT markets had seemed rather weak Tuesday, but demand into the intrastate "ran up on us today [Wednesday]," he said.
The producer said he was doing some early deals for September Midcontinent baseload Wednesday afternoon ranging from index flat to plus 2 cents.
Citi Futures Perspective analyst Tim Evans predicts a higher storage injection than most for the week ending Aug. 13 at 40 Bcf. He anticipates that being followed by growing builds of 43 Bcf and 53 Bcf for the weeks ending Aug. 20 and Aug. 27, respectively.
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