A marketer’s estimate that Thursday’s increase of 19.5 cents by September futures likely would be able to lift cash prices by small amounts Friday proved to be too bullish. A few points were flat to slightly higher, but a large majority of locations continued to sink as forecasts of cooler-than-usual summer temperatures in many regions again depressed power generation demand for gas.
Industrial load’s typical weekend decline was another bearish factor for physical prices. And although Thursday’s storage build report was a little below consensus estimates, there was no doubt that concern about 2009’s rapid storage refill continued to weigh on many traders’ minds.
Only Waha, bolstered to some extent by hot weather remaining in the Texas intrastate market, saw a small gain. Otherwise several scattered flat points were the exceptions to overall losses ranging from 2-3 cents to nearly 65 cents.
The day’s top loss at the Florida citygate (despite Florida Gas Transmission still having an Overage Alert Day in effect Friday) was somewhat deceiving as the next biggest drop was a little more than 30 cents at Tennessee Zone 6.
The screen reverted to negative guidance for Monday’s cash market, with prompt-month futures falling 9 cents (see related story).
Storminess and a cold front were expected to keep highs in much of the South limited to around 90 or lower through the weekend. That was enough to induce some air conditioning load but not as much as the region would normally be experiencing.
Northeastern peak temperatures in the mid to high 80s were still considered to be above normal, but they also were producing only marginal cooling demand. Ditto for the Midwest, which had warmed a bit since midweek but was predicted to top out in the mid 80s Saturday.
The Pacific Northwest remained hotter than normal going into the weekend but had cooled off a bit; Portland, OR, which had been reaching the low 100s earlier in the week, would continue peaking in the low 90s Saturday, according to Weather Central. Alberta was in a warming trend, with Calgary predicted to top out at 91 Saturday. But that was sparking little additional gas demand and was largely offset by a Rockies forecast of cooling again after a brief heat upturn following a moderately chilly midweek. Meanwhile, the status quo prevailed in the rest of the West, with highs ranging from the mid 90s to around 110 in the desert Southwest and much of interior California.
A Rockies producer noted that the region was fairly chilly at midweek; he saw some women wearing light coats at lunchtime Thursday. There will be a warmup into the 80s during the weekend, he said, but that would only return conditions to normal.
The producer said he agreed with the assertion by Questar Corp. CEO Keith Rattie that pressures on Rockies storage injection capacity have eased recently (see Daily GPI, July 30). Questar’s Clay Basin was getting near filled to the brim, he said, but the advent of Rockies Express-East service about a month ago has allowed some regional production that would be having a tough time finding storage space now to move eastward said. Also, CIG’s beginning service at its Totem Storage Field about a month ago provided an additional outlet.
Although some parts of the Southwest are still seeing peak temperatures in the 100s, overall region demand is down a little bit as it has gotten cooler in the mountain areas, a utility buyer said. Another depressant of gas demand is that “all power plants are running well in the Southwest,” he added.
The buyer said his company did virtually all of its August purchases at index. After all, “indexing is the market” and you don’t have to take any price risk, he said.
For the third week in a row the number of drilling rigs seeking natural gas in the U.S. recorded a small gain, defying an overall downward trend for such rigs through 2009 so far. The Baker Hughes Inc. Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/) said 677 rigs were looking for gas in the week ending July 31, up two from a week earlier. Two rigs quit the Gulf of Mexico search, but that was offset by an onshore increase of four, Baker Hughes said. Its latest tally was down 2% from a month earlier and 56% less than the year-ago level.
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