Friday’s trading made it a full week of bearish domination in the cash market. Prices fell at nearly all points again as hot-weather fundamentals remained relatively moderate for the most part, Atlantic tropical activity was essentially nonexistent and the usual weekend loss of industrial load played a part.
Several scattered instances of flat to less than a nickel higher quotes kept declines from running the board. Otherwise, Friday’s losses ranged from 2-3 cents to about 85 cents. Rockies numbers were highly conspicuous in recording all of the biggest drops, with most points in the area being quoted at less than $2 at the low ends of their ranges.
After achieving its only rebound of the week Thursday following a less-than-expected storage injection report, the September natural gas futures contract ignored strength in the nearby petroleum product trading pits at Nymex and resumed its descent Friday with a 9.9-cent loss to $5.523. Because Henry Hub fell only a couple of pennies, the Hub widened its premium to the screen to nearly 20 cents.
In its final update Friday on the effects of Hurricane Dean on U.S. offshore operations, Minerals Management Service (MMS) reported a nearly complete recovery. According to reports from five companies, only one platform remained evacuated while all mobile rigs were manned again, MMS said, and shut-ins had dwindled to 2 MMcf/d of gas and 20 b/d of oil.
A cold front was due to bring a little heat relief to much of the South through early this week, and of course that meant less peaking power generation demand for gas. The Northeast would continue to get warmer, but not enough to support citygate prices. Flooding rains kept cooling load moderate in large sections of the Midwest. Most of the West would not get above the 80s Saturday, and even the scorching Southwest was expected to cool off a bit with the possibility that the remnants of Hurricane Dean would pay a visit to the region with its cooling rains.
Although it did not issue an OFO for Saturday, PG&E projected that linepack on its California Gas Transmission system would exceed maximum target levels Sunday and Monday. A western trader saw a good chance of an OFO being issued by PG&E for Sunday and maybe Monday. He said his area was seeing “really nice weather” in the last few days following a couple of weeks of heat.
The trader said his company already had more than half of its September baseload business completed with some more to do in the coming week. He reported trading Transwestern-San Juan at index plus 1-1.5 cents. El Paso’s San Juan-Blanco pool was a little discounted from there with offers of index plus a penny, while the San Juan-Bondad pool traded at index flat to minus a penny, he said.
A Southwest utility buyer said he had heard that Dean’s remnants might come to his area, adding, “We would love to get some rain. People around here start to party if it gets under 100” degrees in the summer.
He said his company also was loving the lower gas prices it’s been getting lately. Most of the indexed deal offers he was getting for September are looking essentially “flattish,” he said. He agreed with the other trader that Blanco is being offered at index plus 1 cent. He expects to see a “4” in the dollar place for September price indexes. There seems to be a good chance of some panic selling during bidweek that will drive prices lower, he added. Power is fairly inexpensive currently, and September is very much a shoulder-month type of market, the buyer concluded.
It was very quiet in the NOVA Inventory Transfer (NIT) market, a Calgary-based producer said. He pegged September NIT basis at minus $1.29.
The number of drilling rigs actively searching for gas in the U.S. took a big jump of 14 to 1,494 during the week ending Aug. 24, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). That was up 1% from a month earlier and 4% higher than the year-ago tally, Baker Hughes said. All of the increase was onshore (16) as the count in the Gulf of Mexico fell by two.
Citigroup’s Tim Evans lowered his forecast for the next two storage reports to injections of 50 Bcf and 55 Bcf for the weeks ending Aug. 24 and Aug. 31, respectively.
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