Widespread showers and thunderstorms that would continue through the weekend in many areas, along with several cold fronts, kept cooling demand for gas light Friday. That and the usual decline of industrial load during a weekend led to lower prices at most points.
Mixed price movement survived for another day as several scattered points ranged from flat to about 20 cents higher. The overall market saw drops ranging from 2-3 cents to nearly 40 cents. Gulf Coast numbers tended to see most of the flat to higher quotes, while the largest losses occurred in the Midcontinent and at many western points.
Florida Gas repeated as the strongest pipe with an advance of 20 cents in Zone 3. This bullishness resulted from Florida Gas Transmission extending an Overage Alert Day and drastically tightening its imbalance tolerance to 5% (see Transportation Notes). Florida Gas Zones 1 and 2 were up a couple of pennies and flat, respectively.
The fact that the Chicago citygate fell nearly 20 cents while its Michigan counterparts were essentially flat likely was attributable to greater storage buying in the Wolverine state, which boasts one of the largest storage capacities in North America, one source suggested.
Monday’s market will have some futures support after the August contract went off the board Friday with an expiration-day gain of 16.7 cents. The $6.110 settlement may have disappointed some in the industry who were expecting a close below $6. The return of industrial load also will lend a bit of positive guidance to Monday’s market.
Though they have been disconnected more often than not in recent weeks, September crude oil futures likely had a positive effect on the natural gas contract. Crude rallied Friday by a little more than $2 to finish slightly over $77/bbl for the first time in nearly a year.
While Florida Gas Transmission had a problem with low linepack, it was quite different on the other coast. PG&E issued a high-inventory OFO for Saturday (see Transportation Notes). The PG&E citygate dropped a little more than a dime while Malin fell about 15 cents.
A Houston-based marketer said he expects rising prices Monday, but after that it’s hard to tell. You just never know what changes a weekend can bring, he said, adding that the weather will be pretty variable in the coming week. Generally there will be above-normal temperatures in the Northeast and Midwest and below-normal readings in the South. So which will be more important to the gas market, he asked: the greater population of the northern market areas, or the larger saturation of air conditioning use in the South?
The marketer thought most traders had already finished bidweek business or were wrapping it up Friday afternoon following the futures closeout. Of course, some will need to tie up loose ends Monday and/or Tuesday, he noted.
He was among those who expected to see a lower August futures settlement of less than $6. “I guess it’s the record number of short futures positions” being partially liquidated that gave the contract its expiration-day strength, he said.
The marketer reported August fixed prices for Chicago averaging about $5.80 Friday. He hadn’t seen any indexed deal numbers, but said he suspected they would be index-plus due to the screen’s strength over the three-day futures settlement period. Nicor is still getting a “small premium” over Peoples and NIPSCO at the citygate, he added.
Right now temperatures are fairly cool in the Northeast, a utility buyer in the region said. It will get warmer again this week, he said, “but not all that warm.” The buyer said people still buying for storage probably will be slowing down injections during August. Tennessee is still limiting market-area interruptible injections, he said.
Columbia Gas makes his company adhere to steady injection rates while other storage operators are more flexible, the buyer went on. With the latter, if customers want to do so, they we can wait until fall to resume filling accounts if they expect lower prices then, he said. However, the utility is buying “a little” August baseload and will try to stay fairly even on its pace of injections, he said.
A utility buyer in the Lower Midwest said local temperatures had fallen about 10 degrees since Thursday, and rain was the reason. It seems to be raining across much of the eastern U.S., she said.
The number of drilling rigs actively searching for gas in the U.S. last week plunged by nearly two dozen, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). The onshore tally took the biggest hit of 22 rigs, while gas-seeking rigs in the Gulf of Mexico fell by only one, Baker Hughes said.
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