Despite mild weekend weather forecasts for northern market areas, most points rallied Friday as concerns about potential supply disruptions by Hurricane Dean in the coming week spurred purchases targeted for storage injections. Although heat levels were receding slightly in some sections of the South, especially west of the Mississippi River, they remained high enough there and in the desert Southwest to keep cooling load at respectable levels.
Scattered instances of flat to a little more than a quarter lower numbers, primarily in the Rockies, Northeast and Midcontinent, ran against the overall market grain of firmness. Gains of 2-3 cents to about a quarter were strongest in the Gulf Coast, West Texas, Pacific Northwest and California.
After lashing a number of islands in the Lesser Antilles chain, Dean proceeded to qualify as a “major” hurricane in the eastern Caribbean Sea by strengthening to Category 3 status — winds of 111-130 mph on the Saffir-Simpson scale (https://www.nhc.noaa.gov/aboutsshs.shtml). The National Hurricane Center’s “five-day cone” of projected tracking for the hurricane that was posted at 5 p.m. EDT Friday had Dean scoring a direct hit on Jamaica Sunday, grazing the northern tip of Mexico’s Yucatan Peninsula early Tuesday and then approaching the U.S.-Mexico border at Brownsville, TX, Wednesday afternoon.
Of course, hurricane paths can’t be precisely predicted, so Gulf of Mexico producers were already beginning evacuations of nonessential personnel from offshore platforms and rigs (see related story), an activity that was expected to pick up over the weekend. As of midday Friday only 2 MMcf/d in Dean-related shut-ins had been reported to Minerals Management Service.
Prices are quite likely to keep rising Monday, said a source who ticked off the reasons: the growing threat of hurricane disruption of offshore supplies; Friday’s futures strength (unlike Thursday’s waffling, the September contract had a solid up day Friday in realizing an increase of 13.5 cents); heat levels rising again in the South and returning to some degree in the Midwest; and the resumption of industrial load after the typical weekend drop.
A utility buyer in the South reported being told by a Texas supplier that he had to make a 5% cut in a baseload supply deal being shipped on Trunkline because of flooding in the Lone Star state caused by the remnants of Tropical Storm Erin. “We were able to replace it easily,” the buyer said. Temperatures in his area were cooling off a bit, but it was from the mid 100s Thursday into the high 90s Saturday, he added. His company didn’t expect to have any problem with Dean-related supply disruptions because it had nearly full storage accounts to draw on if necessary.
A Gulf Coast trader said her company’s independent producer clients won’t be affected by Dean because they don’t have any offshore operations.
Seven fewer rigs were actively searching for gas in the U.S. during the week ending Aug. 17, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). One was added in the Gulf of Mexico but eight were subtracted from the onshore tally, leaving a total of 1,480 gas-seeking rigs, Baker Hughes said. Its count was down 1% from a month earlier but 4% higher than in the comparable period last year.
Citigroup analyst Tim Evans expects storage injections of 32 Bcf and 60 Bcf to be reported for the weeks ending Aug. 17 and Aug. 24, respectively.
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