The previous day’s futures advance of 16.1 cents and forecasts of continuing high temperatures in the 90s in several areas propelled Thursday’s cash market to gains at most points. Once again flat to moderately lower quotes at several points, primarily in the Rockies, kept price movement mixed.
The Energy Information Administration was slightly to the high side of consensus estimates centered around the mid 70s Bcf when it reported a 77 Bcf storage injection for the week ending July 27. Nymex traders took a bearish attitude toward the report, sending September futures 24.6 cents lower Thursday in the fourth straight reversal of price direction since the contract became the prompt month Monday.
The strength of Northeast citygates was easy to understand, since the region is due to see highs in the low to mid 90s again Friday before a cold front cools off weekend readings. It was a bit more difficult to explain the logic of the Chicago citygate increase of about 20 cents when local highs are expected to go from around 96 Thursday to 87 Friday. Michigan citygates reacted more appropriately to the regional cooldown (Detroit was forecast to peak at 97 Thursday but only 91 Friday) with gains of a nickel or so.
Temperatures are rising in the Rockies, but the area saw moderate softness as excess supply issues surfaced. No OFOs were issued, but Kern River reported high linepack in the three downstream segments of its system. Also, a reduction of injection capacity at Questar’s Clay Basin storage facility goes into effect Thursday (see Daily GPI, Aug. 2).
Although conditions are still not regarded as favorable for tropical storm formation, two areas continue to be monitored in the Atlantic Basin, The Weather Channel (TWC) said. A tropical wave just west of the Windward Islands in the eastern Caribbean was triggering heavy showers and thunderstorms as it moved westward. And over the northern Gulf of Mexico and Florida a low-pressure area was in place producing thunderstorms. “As the shear continues to lessen, there is a small chance that a better circulation could spin out of this broad trough of low pressure,” TWC said.
“You’ll hear a big flushing noise” Friday as cash prices follow the screen downward, a Texas marketer predicted. He doesn’t think there will be enough weekend cooling load to overcome the combination of Thursday’s futures dive and the usual loss of industrial load over a weekend. Prices were a little stronger at first, but then they weakened and the mildly bearish storage report accelerated the late price slide.
A marketer in the Upper Midwest said it was “pretty warm” in her area Thursday. Rains and a cold front are supposed to cool the area off Friday, but it will return to above-normal temperatures early next week, she said. The marketer thought parts of the Midwest were due to break date-specific heat records Thursday, but she hadn’t seen any confirmation of it.
She said her company hasn’t bought any spot gas since Monday, but likely would pick up a weekend package Friday, when presumably the prices would be cheaper after September futures fell nearly a quarter Thursday.
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