Prices were down in a large majority of the cash market Wednesday, succumbing to the previous day’s futures drop of nearly 20 cents and some moderation of high temperatures in the South and West.

A few flat to about a nickel higher points, mostly in the West and Midcontinent (Florida Gas Zone 3 was something of an aberration with a gain of about 16 cents as the pipeline continued to tighten its imbalance tolerance for an OFO-like event), were interspersed among overall declines that ranged from a couple of pennies to about C40 cents at Westcoast Station 2.

California wasn’t quite out of the power grid woes yet, but could at least look forward to some highs of less than 100 degrees for the first time in quite a while. It was joined in a modest cooldown in the Pacific Northwest, where Portland, OR’s high in the mid 90s Tuesday was being trimmed to peak readings in the mid 80s Wednesday and Thursday.

And temperatures in the South also were in modest retreat, with Atlanta’s high around 90 Wednesday due to slide to the mid-80s Thursday. Meanwhile, highs are expected to remain seasonal in the mid to high 80s in the Midwest and Northeast.

Global Insight’s Jim Osten believes that last week’s heat wave was severe enough to cause a net storage withdrawal of 3 Bcf for the week ending July 21. However, he expects a sharp rebound for the current week, projecting a 35 Bcf build in next week’s report. “Last week, the entire nation faced a heat wave, as cooling degree days (CDD) were well above average in all regions and averaged 33% above normal,” Osten said.

A couple of pipelines provided some support for Osten’s projection of a small drawdown. Southern had reported that as of July 6 its storage inventory stood at 48.7 Bcf, or 81% of the 60.0 Bcf in total working gas capacity. However, this week it said the volume had fallen to 47.9 Bcf (80%) as of July 20. And El Paso declared a Strained Operating Condition for Wednesday (see Transportation Notes) because its Washington Ranch facility was still experiencing maximum withdrawals. The pipeline had reported Tuesday that Washington Ranch had seen net withdrawals every day since July 10 except one.

“Pretty boring” was a Gulf Coast producer’s laconic assessment of Wednesday’s market action. He had expected to see a reduction of power generation load in the South with temperatures expected to decline a few degrees, but said it was staying essentially flat. “The Florida market is still pretty hot,” he added. He was “sure that cash will be up” Thursday because of a spike of 47.8 cents in natural gas futures being accompanied by firmness in Nymex’s petroleum-based offerings Wednesday.

Noting the declining storage levels by El Paso and Southern, the producer said “that would be bullish” if some people are withdrawing gas instead of continuing to stuff near-full accounts.

The producer said his company had done most of its August business last week, adding, “Maybe we oversold a little.” He reported getting some more interest in August baseload from end-users on Transco Wednesday, but he had already finished bidweek trading. Basis was getting stronger, he said. Transco Station 65 traded at plus 27 cents at first Wednesday, before weakening a bit to plus 24-25 cents, but then he saw a plus 26.5 cents bid getting made that afternoon. Station 65 basis was being traded in the plus upper 10s last week, he said.

A trader who markets gas on behalf of some independent producers also thought the screen spike would carry daily prices higher Thursday, but then she expects some moderation for the weekend. “We already had some markets back off for Thursday,” she said.

Commenting on the Southern storage dip, the trader said, “That’s a good thing, but we’re still stuffed” on storage. She was glad to hear about some storage retreats “because we haven’t really gotten into the really active part of the [tropical] storm season.”

The trader also reported having done most August business last week, saying she finished Tuesday and had indexed everything. “We have quite a bit termed up for the summer, so I didn’t have much to sell anyway,” she said. She understood that index premiums were going up Wednesday, possibly due to the screen strength.

A marketer in the Upper Midwest said regional conditions were getting “very humid,” with high temperatures around 90 degrees due to persist into the weekend. She hopes that the screen gives back some of Wednesday’s jump on expiration day Thursday.

As further evidence of rapidly filling Michigan storage, the marketer said Consumers Energy is now telling her company and other customers not to exceed 8.5% of their annual contract quantity in injections each month from now on. She reported hearing that Michigan citygate basis for August will be negative, but said she won’t get the number set until Thursday.

Reuters news service said its survey of 24 industry players found an average expectation of a 28 Bcf storage injection in the report to be released Thursday morning. The estimates ranged from a draw of 3 Bcf to a build of 48 Bcf, Reuters said.

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