The market was marginally firmer Wednesday as a significantly greater number of points were seeing small increases than a day before. The rationale for the modest rise in bullishness was elusive, as cooling demand was receding to some extent in the Midcontinent and parts of the South while mostly moderate conditions still dominated the rest of the weather picture. Also, Tuesday’s flat July futures provided no support for cash numbers Wednesday.

Three scattered points with declines of 2-3 cents to about a nickel kept mixed price movement in play — just barely. The rest of the market ranged from flat to nearly a quarter higher.

Tuesday’s weakest two market regions — the Midcontinent and Rockies — tended to have nearly all of Wednesday’s upticks that reached double digits. The Rockies could point to forecast lows in the 40s creating a modicum of heating load, as well as further easing of previous excess supply issues, as reasons for their general rally.

It was quite a bit harder to explain in the Midcontinent, as Midwest market-area temperatures are remaining cool to chilly — but far from cold. And Oklahoma City highs, which had been matching the South in the low 90s earlier this week, is predicted to peak at only 80 Thursday with a low of 64 amid thunderstorms.

Although most of Texas will remain scorching in the mid 90s Thursday, some more easterly locations in the South will be cooling off slightly into the upper 80s, while mild to cool forecasts remain in effect for the Northeast. And outside of some chill returning in the Rockies and western/central Canada along with below-normal (but still high) heat levels in the desert Southwest, western weather remains benign for the most part.

For a while Wednesday morning it looked as if front-month futures might manage to give some positive guidance to Thursday’s cash trading, but the gas contract was unable to piggyback onto the strength in Nymex’s petroleum product complex and ended the day 2.3 cents lower (see related story).

El Paso had canceled a warning of a potential Strained Operating Condition related to high linepack, and a processing plant outage should be starting to reduce supplies on Westcoast, although the pipeline still said it had more linepack than desired Wednesday.

Florida Gas Transmission followed up Tuesday’s cautionary note about a potential Overage Alert Day (see Daily GPI, June 10) by actually issuing one Wednesday. The Florida citygate basically repeated a gain of about 20 cents Wednesday, while Florida Gas Zones 2 and 3 saw considerably more modest upicks of about a nickel each.

Despite a flat price performance, Dominion volumes traded on IntercontinentalExchange (ICE) fell tremendously, dropping by more than 100% from 409,100 MMBtu Tuesday to only 175,800 MMBtu Wednesday. On the other hand, Henry Hub (up slightly) deals on ICE totaled 849,500 MMBtu Wednesday, greatly exceeding the previous day’s 722,500 MMBtu.

A Northeast marketer said the market had almost no weather-based load to explain Wednesday’s firmness, but noted that dynamic has been pretty well established for a while now. A flat screen Tuesday and little change again Wednesday also offered essentially nothing to the cash market, he added.

About the only positive note he could think of was that some people must be sticking to their purchase schedules for storage injections, and there might have still been enough power generation load for gas-fired peaking units across the southern tier of states to keep a floor under cash quotes.

The marketer said he expects the physical market to be “a hair weaker” Thursday, “and then we’ll see [Friday] for the weekend.” Basis spreads between the Gulf Coast and Northeast citygates are “definitely” beating the variable costs of transportation at this time, he said.

A marketer in the Upper Midwest said she is hopeful that she recently got to turn off her home furnace “for good” until next fall arrives. Her company is buying “a little bit” of spot gas for clients on most days recently. She thinks most of it is going for current burns, as most of the clients’ storage accounts “are pretty healthy” at this time.

Tim Evans of Citi Futures Perspective projects a storage addition of 110 Bcf to be reported for the week ending June 5, to be followed by builds of 105 Bcf each in the weeks ending June 12 and June 19. “We continue to watch for the known drop in North American drilling activity to translate into enough of a slide in production to rebalance this market,” Evans said, “but our storage forecast implies that the 423 Bcf five-on-five-year average surplus will expand to 488 Bcf by June 19 and that may not necessarily be the peak.”

Cameron Horwitz of SunTrust Robinson Humphrey said he is looking for an injection of 110 Bcf during the week ending June 5.

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