With cooling load sinking rapidly, especially in the South, prices fell at nearly all points Wednesday. The previous day's 2.9-cent decline by September futures as they entered their three-day countdown to expiration also contributed to cash softness.
Only a few flat to about 2 cents higher points in the Southwest avoided losses ranging from 2-3 cents to about 20 cents. Most of the largest downturns of more than a dime were in the Northeast, where relatively mild temperatures were beginning to dominate.
Futures will continue to be a negative guide to the cash market Thursday as the prompt-month contract sank another 16.8 cents to $3.871 Wednesday (see related story). It was the first time for a front-month contract to trade south of $4 since May futures reached a low of $3.810 on April 1.
Danielle, which had reorganized into a hurricane Wednesday, was still expected to veer northeast well away from the East Coast and pose no threat to either Gulf of Mexico production or East Coast demand. Meanwhile, a weak low-pressure system in the western Gulf to the east of South Texas had a low chance (10%) of developing, the National Hurricane Center said. It was also monitoring Tropical Depression 7, which was only starting to enter the middle Atlantic.
After rising less than half a penny Tuesday, Rockies Express deliveries to Tennessee near the Clarington Hub fell about a dime Wednesday but volumes were up from 159,200 MMBtu Tuesday to 240,000 MMBtu Wednesday, according to IntercontinentalExchange (ICE). However, ICE also said Henry Hub volume traded on its system dropped from 566,600 MMBtu Tuesday to 497,000 MMBtu Wednesday while the price there fell nearly 8 cents.
Most Southern highs outside Florida were expected to fall into the unseasonably mild 80s Thursday, and a warm-up along the West Coast was proving to be short-lived. The overall forecast called for much more moderate conditions than could usually be expected for late August.
Northern Natural Gas indicated the relatively cool temperatures in its Upper Midwest service area, saying that with a normal system weighted temperature of 69 for this time of year, it projected averages of 67 Tuesday and 66 Wednesday, followed by a slight warming to 70 Thursday and 72 Friday.
Almost no transportation restrictions were in effect as of Wednesday.
ICE indicated initial bidweek trading of the Chicago citygate around $3.90, which was much lower than NGI's August index of $4.63.
The National Weather Service expects above-normal temperatures during the Aug. 30-Sept. 3 workweek from eastern New Mexico and the Texas Panhandle throughout the Midwest and Northeast, extending southward through the Mid-Atlantic along a thin strip along the coast into most of peninsular Florida. In its six- to 10-day forecast posted Tuesday afternoon, the agency predicted below-normal readings everywhere west of a line extending southward from the western half of Montana into northern Arizona.
IAF Advisors analyst Kyle Cooper predicted a 40 Bcf addition to storage for the week ending Aug. 20, saying that would fall short of year-ago and five-year average injections of 54 Bcf and 59 Bcf, respectively.
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