Heat levels are starting to rev up again in the Northeast market area, and the resultant increase in power generation load induced price increases on most pipes Thursday.
A number of points in the Midcontinent and West were flat to down as much as about a dime. Gains at other points ranged from a couple of pennies to about a quarter. Northeast citygates recorded the largest advances.
Although Northeast temperatures will range up to 15 degrees above normal Friday and Saturday before a cold front arrives Sunday, an already-there cold front in the Midwest was suppressing production-area prices. However, delivered prices were up 20 cents in Chicago and a little less than a dime at Michigan citygates. Hotter weather is due in much of the Midwest by Sunday. Meanwhile, temperatures are seeing little change from the 90s or greater highs prevailing across the southern half of the U.S.
The Energy Information Administration’s report of a 75 Bcf storage injection for the week ending June 17 was in line with most prior expectations (see futures story coverage of a revision in prior storage data). After initially taking a dive following the report, the screen eventually took a modestly bullish turn, winding up the day 3.1 cents higher.
Once again natural gas futures action was very sedate in comparison with the fireworks going on in Nymex’s petroleum product trading pits. Crude oil for August delivery not only notched a daily settlement record of $59.42/bbl (up $1.33) for a prompt month but also hit an intraday all-time high of $60. Outer months were even stronger, as September and October crude futures settled above $60.
Commenting on the continuing lack of processing of Alberta supplies at the Empress provincial border (see related story), a Northeast LDC buyer said his delivered prices for Canadian gas “are still cheaper than what we can transport from the Gulf Coast.” He noted that utilities have limits on the heating values of received gas; otherwise system damage can result. He presumed that TransCanada would be able to keep the richness of its deliveries within specifications. The buyer recalled hearing estimates in the past that it took an average of about three days for a gas molecule put into the pipe in the Gulf Coast to reach the Northeast, but said he had no good feel for how long the rich volumes on TransCanada would require to reach his LDC.
A Northeast marketer said the unprocessed gas should increase sales and boost prices from the higher heating value of each Mcf. He didn’t think it would cause any problem for the market area. The Northeast is expecting temperatures to be 10-15 degrees above normal from the New York City metro area north through New England starting Friday. He sees strong power generation load in the area through next week, saying there will be a little relief from the heat around Sunday and Monday, but not much. With crude oil prices acting like they are, hot weather returning and a long holiday weekend approaching, “the stage is set for a lot of volatility next week,” he said.
TransCanada said its bypass of the Empress extraction plants has not affected pipeline operations, but due to the higher heating values in downstream deliveries, at the start of Friday’s gas day it will adjust the posted heat values for the Empress and McNeill borders for the remainder of June to 38.20 MJ/m3 and 39.00 MJ/m3 respectively. The currently posted Empress and McNeill heat values for July will remain unchanged at this time, it said.
On the eve of the official start of July bidweek, a marketer said the most recent Chicago basis number he was hearing was minus 5 cents.
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