A few points, nearly all in the West, were flat to up as much as about a quarter Monday, but only one advanced more than a dime. There was a solid retreat across the rest of the market, with losses ranging from less than a nickel to a quarter or so. The Northeast recorded most of the declines of 20 cents or more.
Besides the negative factor of a dime-plus futures drop on Friday, parts of the market were continuing to lose some of the heat-driven power generation load they had experienced in the previous week. Rainy weather will keep cooling off much of the South east of the Mississippi River to highs in the 80s Tuesday, and a significant cooldown was under way in the Northeast. A producer noted that the New York City area, which peaked in the low 90s Sunday, was down to the mid 80s Monday and expected to have a high only in the low 90s Tuesday.
A rally Tuesday is believed to be unlikely. A trader of Midwest citygates said major screen softness came too late Monday morning to do more than drag some late quotes a little lower, but he expects it to have a considerably more price-depressing effect Tuesday after July futures fell 22.2 cents on their next-to-last trading day. Once again the natural gas contract detached its course from new strength among Nymex’s petroleum-related offerings. Crude oil, heating oil and unleaded gasoline futures all were up sharply Monday, with crude for August delivery establishing yet another all-time high for a prompt month by rising 70 cents to a $60.54/bbl settlement as future supply worries were exacerbated by the weekend election of a hardliner known to be unfriendly to the U.S. as president of Iran.
The West’s ability to produce even a small bit of firmness was largely attributed to the end of weekend OFO’s by California’s two giant distributors (see Transportation notes) and continuing triple-digit heat levels in the desert Southwest.
Temperatures were starting to drop slowly in the Midwest, a Calgary-based producer observed, but highs were still predicted to be around 90 degrees Tuesday in such metropolitan areas as Detroit and Chicago. “There was a lot of power plant load” still around with such heat levels, he said. Chicago should have a couple more days of high cooling load, and then it will taper off, he said. The Chicago area should be seeing highs in the mid 80s next week, he added.
Harking back to last week’s big loss of processing capability at Alberta’s Empress provincial border export point, the producer said some of the region’s electric utilities and end-users were asking for lower-MMBtu gas, while other customers sought higher-MMBtu supplies. Satisfying the different requests was primarily a matter of which pipe a supplier used, he said.
Gulf Coast-Northeast spreads got tighter as a cooling trend in the market area produced larger losses for delivered prices than in the production area, a Gulf Coast producer said. He reported doing basis deals for July Monday at plus 59-61 cents for Transco Zone 6-NYC; at plus 54 cents for Texas Eastern M-3; and plus 27-28 cents for Columbia Gas. He said a lot of July deals were getting done Monday and thinks most bidweek business will get wrapped up Tuesday.
However, another producer who trades the Midwest had a quite different perception of bidweek progress. He saw July activity as “pretty slow” Monday, noting that about 140 MMcf/d was sold at the Chicago citygate Friday via an online trading service, but deals for only 40 MMcf/d or so were recorded Monday. Chicago basis was still running around minus 6 cents, he said.
Citigroup analyst Kyle Cooper feels that storage injections were stronger last week than the week before, when the government reported a build of 75 Bcf. Cooper’s final estimation for this week’s report is an injection of 85-95 Bcf.
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