Even with falling temperatures in the Friday forecast for many areas, prices rose at most points Thursday. As on Wednesday, most of the gains were fairly modest. The cash market did have a little prior-day screen support from the 4.7-cent gain by September futures Wednesday.
A large majority of points ranged from flat to nearly 45 cents higher. The largest upticks were concentrated in the Rockies, which is one of the few regions where heat levels will be rising moderately Friday. A few scattered locations recorded losses of a couple of pennies to as much as about a quarter.
The Energy Information Administration’s report of a 56 Bcf storage build during the week ending Aug. 1 was moderately less than consensus expectations in the low 60s Bcf. But after rallying for a while after the report, prompt-month futures eventually succumbed to a loss of 20.2 cents (see related story).
The recovery of Gulf of Mexico production that was suspended due to Tropical Storm Edouard was so nearly complete Thursday that Minerals Management Service (MMS) said it was issuing its final update on Edouard-related activity statistics. Based on reports from 18 companies received by 11:30 a.m. CDT, MMS said only 22 MMcf/d of gas and 1,517 b/d of oil remained shut in. The number of evacuated platforms and mobile drilling rigs had dwindled to zero, the agency said.
Some extra supply could start coming into the Gulf Coast market Friday. Majority owner Enterprise Products Partners hoped to finish a maintenance project at the offshore Independence Hub either late Thursday night or early Friday, said spokesman Rick Rainey, “and then if everything checks out OK,” the process of ramping up to approximately 800-850 MMcf/d of production might begin sometime Friday.
Although highs will change little in the Northeast Friday, the region’s cooling load was light with peak temperatures due to range from the mid 70s to mid 80s. Temperatures will range from average to as much as 15 degrees below average over the next three days in the Northeast, according to The Weather Channel (TWC).
Most of the South will be in a significant cooling trend, with Thursday’s highs in the low to mid 90s dropping back to the mid to upper 80s Friday, as a result of what TWC called “an atypically strong cold front” sweeping into the area from the Southeast coast. An exception will be Texas, where — following a respite from the heat in the eastern and central parts of the state earlier this week from Tropical Storm Edouard — temperatures are reaching the 90s (and low 100s in a few cases) at virtually all locations.
The Midwest is also due for a substantial reduction of cooling load, with few sections getting above the 70s Friday.
Most of the West will range from warm to hot, but a cold front will take temperatures considerably lower across Western Canada and the Pacific Northwest by the end of Friday, TWC said.
Florida Gas Transmission’s tightening of the imbalance tolerance on an Overage Alert Day (see Transportation Notes) has relatively little market impact. Florida Gas Zone 3 and the Florida citygate were up about a nickel and nearly 15 cents, respectively, but Florida Gas Zone 2 sustained a small loss.
Gas is an “irrational commodity,” said a Gulf Coast producer, and that’s why prices can sometimes be firmer in the face of the fundamental influence of less cooling demand. “You can’t apply logic to an illogical market,” he added. Cash prices went a little higher when September futures were initially stronger following the storage report, but the spot market run-up was short-lived, he said.
A Midwest utility buyer similarly had no idea why prices were mostly higher, especially since the weather was “pretty nice” in his area, although he did note the modest amount of screen support from Wednesday. Stressing that it was strictly speculation, he said the below-par storage injection report may have dragged late cash quotes higher. He also suggested that some people may have needed to make up pipeline imbalances from the loss of some Gulf of Mexico production earlier in the week.
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