Cooling load proved to be a stronger influence on the spot market than a Gulf Coast trader had expected Wednesday (see Daily GPI, June 25). Despite the previous day’s 11.8-cent drop by July futures, flat to moderately higher quotes prevailed at most points Thursday of forecasts of highs in at least the mid 80s and often much higher continued to dominate the U.S. weather outlook, while conditions remained fairly mild in most of Canada.

A gain of a little more than $1.10 by the Florida citygate, as Florida Gas Transmission (FGT) extended an Overage Alert Day that began June 16 through at Thursday, was an anomaly. Otherwise nearly all points ranged from flat to about 20 cents higher. A few scattered locations saw losses of less than a nickel.

For a change the Energy Information Administration came in below consensus estimates on either side of 100 Bcf when it reported a 94 Bcf storage injection for the week ending June 19. The smaller-than-expected build was deemed modestly bullish by some analysts, but Nymex traders seemed generally unimpressed as they sent July natural gas futures only 8.3 cents higher amid significant strength in the petroleum-based contracts (see related story).

Despite PG&E extending a systemwide high-inventory OFO (see Transportation Notes), the PG&E citygate recorded Thursday’s biggest gain (excluding the Florida citygate).

The Electric Reliability Council of Texas (ERCOT) said the state could see record peak demand in the late-afternoon hours Thursday as temperatures continued to hit the century mark or higher in much of the state. Despite the heat, prices at most Texas points were only flat to a few cents higher. However, predicted highs in the 90 area or greater were extending into the Northeast and returning at some Midwest locations. The Pacific Northwest and California coast, along with much of Canada, are the only noticeably mild areas at this point.

Northern Natural Gas indicated the current extent of extra cooling demand in the Midwest in noting that while its normal system weighted temperature at this time of year is 70 degrees, it projected averages of 80 both Thursday and Friday. However, things will be cooling off this weekend, Northern said, as it expects averages of 73 Saturday and 71 Sunday.

As a Rocky Mountain producer expressed it: “Almost there.” Rockies Express (REX) said it expects to commence service in its eastern segment through Ohio’s Lebanon Hub effective with Monday’s gas day (see related story).

A Northeast marketer acknowledged that rising temperatures were responsible for tiny citygate price increases, but said he wasn’t especially impressed by the change in weather fundamentals. He expects a “pretty quiet” Friday trading session for weekend supplies, with prices mostly flat to down a little bit.

A Rockies producer reported being unable to detect any positive impact Thursday on Rockies basis for July from the announcement that REX-East service through the Lebanon Hub in Ohio was almost a certainty by the end of June (see related story). He questioned some reports of REX-West running full through its already-active interconnects, saying his best perception was that REX-West was actually about 200 MMcf/d or so short of its total 1.5 Bcf/d capacity. So as far as he is concerned, it’s “still a waiting game” on the ultimate impact of REX-East. The pending new capacity will eventually benefit the Rockies market, he said, but it’s not sure when and it might not occur until as late as winter.

The producer said he had seen a report that about 1 Bcf/d was being withdrawn from storage in Texas during the last two days because of the state’s torrid heat. That still doesn’t negate the fact that storage facilities are rapidly being filled, especially in the West, he said, noting a restriction on injections that began last week at Questar’s Clay Basin and another one initiated Thursday at Jackson Prairie on the Northwest system. “Who’s going to take delivery on futures toward September” when no more storage injections are possible, he asked rhetorically.

A Florida utility buyer said he was busy coping with coping with FGT’s Overage Alert Days this week, adding that it was “a little hectic” on seeing what flowed or didn’t, especially considering a couple of maintenance constraints. A “pretty illiquid market” was creating wide price spreads at the Florida citygate, he said.

The buyer said he was seeing July basis into Florida Gas Zone 3 at plus 15 cents, which was stronger than in recent months.

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