Prices continued to fall at virtually all points Thursday as weak prior-day futures continued to weigh on the market and predictions of hot weather lasting into at least mid-June were falling short of expectations.
Flat Westcoast Station 2 numbers, where British Columbia temperatures are failing to reach 60, were the exception to the overall softness. Most declines were in single digits, significantly smaller than those of a day earlier, in ranging from a little less than a nickel to a little more than 60 cents.
Although Florida Gas Transmission (FGT) continued an Overage Alert Day, it loosened the imbalance tolerance considerably (see Transportation Notes), and the Florida citygate’s drop of more than 60 cents was an aberration. Otherwise declines topped out around nearly 15 cents.
The California market saw only small dips after PG&E ended a high-inventory OFO (see Transportation Notes).
The Energy Information Administration’s (EIA) report of a 99 Bcf addition to storage in the week ending June 4 was at the high end of expectations ranging from the low to upper 90s Bcf. Despite an earlier push higher, the cash market will continue to have modest negative support Friday after July natural gas futures fell another 3 cents (see related story), even though there was continued strength among Nymex’s other energy futures products.
As expected, a tropical wave moving into the southeastern Caribbean Sea Wednesday dissipated and failed to amount to anything significant to the gas market.
Although some warmer temperatures were arriving in the Northeast and Midwest, they were still too moderate to be meaningful to power generation load for gas. However, the return of low- to mid-90s highs from the Southeast through the Rockies and peaks still surpassing 100 in such desert Southwest locations as Phoenix may be able to revive the weekend market.
A Florida utility buyer said despite the state citygate’s big price retreat Thursday, compressor station maintenance restrictions meant that shippers who had Primary Firm on FGT could still make a handy profit. There has been as much as a dollar spread in citygate numbers this week, he said; the key “is how desperate people are to get gas.” However, he expected delivered numbers to keep retreating Friday. Although hot temperatures will continue in the Sunshine State, he said, people won’t be quite so desperate for weekend supplies.
Barclays Capital analysts said despite the moratorium on Gulf of Mexico deepwater drilling, it expects that the effect on natural gas production “is likely to be small regardless. In the event of a six-month moratorium, production would be 8 Bcf lower in 2010 and 74 Bcf lower in 2011, according to the EIA. More stringent regulation of land drilling would be a greater concern for natural gas as this segment is a much more important source of production growth,” the analysts said.
After revising its six- to 10-day forecast for the June 14-18 workweek to above-normal temperatures throughout nearly all of the U.S., the National Weather Service had a massive reduction Wednesday. For the June 15-19 period it was then predicting above-normal readings only in an arc northeastward from western Arizona into the southeastern corner of Wyoming through all of Nebraska and then curving southeastward through eastern Missouri into most of Arkansas and Louisiana. Normal conditions were expected otherwise.
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