The market rallied by generally small amounts Monday from the overall weakness it was experiencing going into the weekend. Although Tropical Storm (TS) Don had long since dissipated over South Texas and forecasts going out to mid-August are more moderate than before, heat is building to high -- sometimes severe -- levels in much of the U.S., especially in the central region and parts of the desert Southwest.
The minor bullishness of industrial load returning from a weekend decline was pretty well offset by the bearishness of the previous Friday's futures drop of 9.9 cents.
A large majority of upticks was in single digits amid pricing ranging from flat to about 15 cents higher. Several scattered points recorded losses, all in single digits ranging from 2-3 cents to about a nickel.
September futures spent much of Monday approximately a nickel higher and despite a couple of mild dips ended the day up 4.3 cents (see related story).
Don was weakening as it approached the South Texas coast late Friday and quickly became what the National Hurricane Center (NHC) called a "remnant low" after coming ashore as a tropical depression near Corpus Christi. Don caused little in the way of significant damage, but many Texas were disappointed that it brought only a meager amount of rainfall into the drought-stricken state. The Weather 2000 forecasting firm noted that it has now been more than a year since a tropical storm has breached the U.S. coast and almost three years without a hurricane landfall.
Meanwhile, NHC was monitoring a "vigorous" tropical wave that had showers and thunderstorms extending from the Lesser Antilles island chain eastward for a few hundred miles. As of early Monday afternoon this system had an 80% chance (lowered from 90% that morning) of becoming TS Emily within the next 48 hours as it moved west-northwestward at 15-20 mph, NHC said.
The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEM) said that as of midday Monday it had gotten reports of only 46 MMcf/d, or 0.9% of normal Gulf of Mexico (GOM) gas production, remaining shut in as a result of Don. That was down from the peak of 349.5 MMcf/d reached Saturday. BOEM also said 31,964 b/d of oil, or 2.3% of normal GOM output, was still offline Monday. No production platforms or mobile drilling rigs remained evacuated, BOEM said.
Even the formerly mild to cool West Coast is starting to feel the heat a bit, as Los Angeles is now reaching the mid 80s, according to Kern River's bulletin board, and Portland, OR is peaking on either side of 80 early this week. Otherwise, except for some Rocky Mountain highs retreating significantly into the mid 80s Tuesday. Lower Eastern Canada along with much of New England, the Upper Plains and parts of the Midwest are also being limited to the low to mid 80s.
For most of the market, however, highs in the 90s and in some cases the 100s are far from being a novelty. Although many temperatures will be moderating by the end of the week, for now they are able to provide enough cooling load to support cash prices from the lower Northeast through most of the southern two-thirds of the U.S.
With Houston starting to join much of the rest of the state with high temperatures of 100 or more through Friday, The Electric Reliability Council of Texas (ERCOT) asked consumers and businesses to reduce their electricity use during peak hours from 3 to 7 p.m. Monday and for the rest of the week. ERCOT's current peak demand record of 65,776 MW was set Aug. 23, 2010.
The weekend end of an Overage Alert Day by Florida Gas Transmission (FGT) still allowed production-area numbers into FGT to rise slightly less than a nickel. However, although Southern is initiating a limited-delivery OFO Type 3 for five delivery groups Tuesday (see Transportation Notes), prices into the pipe only gained a couple of pennies or so.
IntercontinentalExhchange (ICE) said quotes for its new Ruby-Malin point launched last week were flat, and volumes traded there of 75,000 MMBtu on the ICE platform were barely lower than on Friday, when the point fell more than a dime.
A Texas-based marketer said she was surprised that prices weren't even stronger Monday with all of the current major heat levels. It appears that the big debt reduction deal is having little positive effect on either the stock or energy markets, she added.
Gas-directed drilling activity in the U.S. fell by 12 units to 877 during the week ending July 29, the Baker Hughes Rotary Rig Count said. All of the dozen rig deactivations occurred onshore, according to Baker Hughes, with no change in the Gulf of Mexico. Its most recent tally was flat from a month ago and down 10% from the year-earlier level.
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