Several flat to marginally lower prices (mostly in the West) again prevented the cash market from making it a clean sweep of increases Tuesday. Otherwise, lingering heat, although not anywhere near as bad as in late July and early August, allowed prices to ignore a dime drop in futures the day before and record gains of anywhere from 2-3 cents to nearly 45 cents.
Prospects for development of Tropical Storm Debby probably gave a little extra boost to cash numbers. It certainly was a factor in pushing September futures up nearly 40 cents despite the tropical depression that might form Debby being far out in the eastern Atlantic (see futures story).
The 40-cents-plus cash uptick was somewhat deceptive about the market’s strength, since other than FGT Citygate no point was up by more than about 20 cents and a slight majority of gains were in single digits.
Although Florida Gas Transmission did not declare an Overage Alert Day Tuesday, buyers in the Florida market area may have been anticipating one as they made citygates the day’s biggest gainer. Highs around 90 were forecast for Wednesday in cities like Miami, Orlando and Jacksonville.
The National Hurricane Center (NHC) said Tropical Depression Four (TD4) could become a tropical storm later Tuesday night or Wednesday as it continued moving west-northwestward away from the Cape Verde Islands off the West Africa coast. However, any potential threat to the offshore production area seemed extremely remote as NHC’s “five-day cone” of projected tracking had TD4 (or Debby, as the case may be) still aimed straight at the Northeast as it gets into the central Atlantic sometime Sunday.
Prices made their majority gains despite predicted temperatures being no more than approximately seasonal throughout most of Canada and the northern U.S., and not being terrifically hot for late August across the southern U.S.
One source expected the screen spike to sustain further gains by most if not all points Wednesday.
“We didn’t need this [soaring screen],” said a trader who markets gas on behalf of independent Gulf Coast producers. “I liked [futures] prices where they were.” The potential of another tropical storm was the only thing her company could see as behind the screen’s strength Tuesday, she said. But she thought Nymex traders may have overreacted because of the depression’s distance and expected path toward the Northeast. “But then, it doesn’t take much to move this thing [gas market] any more,” she laughed.
The trader reported still having some irrigation load among agricultural interests, so she guessed the harvest season — when farm product processors typically increase their gas demand significantly — is still off in the future.
She reported already getting a lot of indexed deals done for September. Nearly all were at index-flat, which she said was “better than selling at index-negative.”
Kern River, whose bulletin board provides something of a barometer of the western supply situation, was reporting normal linepack in its farthest upstream segment and low linepack in the three downstream segments Tuesday. That was a wide swing from the middle of last week when low linepack was being reported systemwide (see Daily GPI, Aug. 17).
Southern Natural Gas, which until around mid-July had been running well ahead of schedule on storage refills at its two facilities in Mississippi and North Louisiana, now has fallen behind its 2004 pace. As of Aug. 20, Southern said, working gas inventory was 47.3 Bcf, or 79% of total capacity of 60 Bcf. On Aug. 19, 2004, the pipeline and its customers had stashed away 50.6 Bcf, or 84% of capacity, a bulletin board posting said.
Most of next week’s heat will remain concentrated in the West and lower South, according to the National Weather Service (NWS). In its forecast for the Aug. 28-Sept. 1 workweek, the agency expects above normal temperatures everywhere west of northwest Minnesota through the western edge of the Midcontinent/Texas Panhandle (except for the western halves of Oregon and Washington state, where normal conditions are like. NWS also looks for above normal readings from West Texas through a strip along the Gulf Coast that broadens to include all of Florida. The only place where NWS predicted below normal temperatures is in an oval-shaped area stretching from the westernmost tip of New York state to the northeast corner of Arkansas and taking in most of Appalachia and the eastern Midwest.
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