A moderate amount of strength in the Rockies was the major exception Wednesday to a generally mixed bag of prices. Non-Rockies numbers were mostly flat but also ranged up to about a nickel higher or lower in some cases. Transco Zone 6-NYC took the only big fall of a little more than 50 cents.

Sources were similarly mixed on whether this week’s heat-related bullishness was ending or not. Although the screen eventually fell by 6.5 cents, it was mildly positive during the morning’s cash trading, one said. Also, the crude oil and heating oil futures contracts achieved mid-sized gains, she noted.

But others pointed to a slow moderation of Northeast heat, a trend of falling numbers in the West and the screen’s late softness as signs that the rally might be on its last legs.

The heat index in the New York City area was well over 100 degrees Tuesday, a marketer said, but it was expected to decline to about 100 Wednesday and to 95 Thursday. “But it will still be pretty warm in the Northeast through early next week,” he said, adding that the market got some support from firm oil futures and the fact that “we’re just getting into the heart of hurricane season.”

Another trader attributed the sharp drop at Transco Zone 6-NYC and a smaller one at the zone’s non-NYC pool to holders of storage gas pulling more from their reserves “rather than paying the relatively high prevailing price. For example, with the screen trading at $2.92 and the September NYC basis at 40 cents, it made sense to forego injections or even to initiate withdrawals Wednesday.” That was not necessarily the case two weeks ago when NYC quotes soared to $10-11, he continued. And because traders opted to cap prices by withdrawing gas from the ground this week, the trader believes that next week’s storage report could fall short of last week’s 33 Bcf injection announcement and well below the 65 Bcf injection seen as possible in Thursday’s report.

However, in some cases Wednesday the lower prices were not because of storage sellers, but rather due to pipeline constraints, he said. He believes Tennessee Zone 6 fell to a nickel or more discount to Texas Eastern M-3 Wednesday because of constraints at Mendon, MA, among other places. Meanwhile, M-3 was boosted by those replacing Zone 6 gas with relatively cheaper priced M-3 supply.

A western marketer thought it a bit strange when Keystone (El Paso-Permian) traded early at $2.88, “which seemed high. As soon as Waha [normally at a premium to Keystone] started trading a little later at $2.78-80, I knew we needed to sell some Keystone.” As the morning wore on, Waha went up to $2.83 but Keystone fell into the high $2.60s, she said. San Juan-Blanco similarly fell from $2.70-73 in early trades but wound up at $2.50, with the marketer saying, “I bought a little early but wished I hadn’t. Luckily it was a small volume, so it didn’t hurt too much.”

Another trader also looked askance at Permian quotes starting out at a significant premium to Waha. There was the usual utility buying at Waha, he said, “but not enough demand to produce anything more than a nickel premium over Permian. The spread was too narrow most of the morning to justify shipping it [from Permian] to Waha. However the Permian-Katy spread was a different story. At about 20 cents, the basis between those two points easily exceeded the variable plus fuel cost of 15-16 cents, making it economically prudent to ship gas east to Katy.

A Rockies source said the firmer numbers there and in the Pacific Northwest were likely boosted by hot weather continuing to reign over much of the West outside of coastal California (where flat prices prevailed). He also said a plant turnaround was ongoing at the ExxonMobil-operated Shute Creek Plant in Wyoming, which was curtailing supply primarily into Questar and to a lesser degree into Northwest and Overland Trail. He had heard, however, that the plant was going to start ramping back up production Thursday, which would seem to have argued for softness.”

The cash market was “kind of dull” in the Midwest, according to one marketer, who said the Chicago citygate had a tight range, moving only a few pennies all day. “I am betting that the bulls are done for a while. The rally on Tuesday was short-covering and not really based on heat.”

Temperatures in Calgary are fairly cold, a producer reported, which may have been related to an intra-Alberta price rise of a couple of cents.

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