Although small losses were slightly dominant, a sizeable number of flat to modestly higher locations kept cash market movement mixed Monday. Most severely hot weather with triple-digit highs was still confined to the south-central and Southwest sections of the U.S., and although the South could expect to keep peaking in the low to mid 90s, that represented merely seasonal to slightly below-normal conditions for August.
The previous Friday’s prompt-month futures gain of 4.8 cents and the return of industrial load from its weekend decline obviously did little to prop up the cash market. Numbers that were flat to up about 15 cents tended to be concentrated in the Rockies, where 90s highs have returned in some sections. ANR ML-7’s gain was the day’s only uptick of a dime or more. A moderate majority of points recorded losses ranging from 2-3 cents to a little more than a nickel.
The first hurricane of the year in the Caribbean area failed to impress Nymex traders, who pushed the September contract 5.1 cents lower Monday (see related story).
The ninth time was the charm, so to speak, for the 2011 Atlantic hurricane season. After eight named systems that never strengthened beyond tropical storm status, the season’s first official hurricane, Irene, had crossed Puerto Rico early Monday morning and was passing to the north of Hispaniola around midday. Like nearly all of its storm predecessors this year, Irene was unlikely to have any significant effect on Gulf of Mexico production, although that couldn’t be ruled out. Its projected tracking to the northwest would also take Irene north of Cuba before heading into the Bahamas. Most of a hurricane’s highest winds and heaviest rainfall tend to occur north and east of the center, so whether Irene’s impact could stretch far enough westward across the Florida peninsula into the easternmost Gulf platforms was dubious.
Most of Irene’s meaningfulness to the gas market was likely to be cooling off coastal sections of the South Atlantic and Mid-Atlantic regions, thus suppressing gas-fired power generation demand. However, AccuWeather.com saw a fair chance that the hurricane could make landfall in the Carolinas (see related story), which would greatly spread its bearish effect from cooling rains and potential power outages.
Meanwhile, former Tropical Storm Harvey, which was designated late Friday afternoon, was dissipating quickly over Mexico’s Sierra Madre mountains early Monday afternoon after having made final landfall as a tropical depression near Veracruz. And a large low-pressure system moving northwestward from about 575 miles west of the northernmost Cape Verde Islands had only a 10% chance of becoming a tropical cyclone within the following 48 hours.
Rockies producers were getting closer — but no cigar yet — to a restoration of full service on Bison Pipeline after the pipeline said Monday it had completed inline inspections (ILI) on the section of pipe damaged by a late-July rupture (see Daily GPI, July 25). Bison reported getting permission from the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration to return the pipeline to service at a reduced pressure. However, the reduced pressure will continue to limit available operational capacity to the ongoing 230,000 Dth/d, and force majeure will remain in effect. Shippers will be notified when Bison is able to return to its design capacity of 477 MMcf/d.
After SoCalGas implemented a high-linepack OFO Sunday but canceled it the next day, there were no major pipeline constraints left in effect. The SoCal citygate and Southern California border were flat and about a nickel higher Monday, respectively.
Interior California will be heating up into the mid 90s by Wednesday, according to the Kern River bulletin board’s AccuWeather.com report, and even such previously cool coastal areas as Los Angeles will start to approach the upper 80s.
A slight warming trend will be under way Tuesday in the Midwest, while conditions will be largely status quo. Cooling load is staying on the lean side in both regions as few locations will peak above the low to mid 80s.
Irene was unlikely to have much impact on prices, commented a utility buyer in the South, other than to possibly lower some of them in his region. August continues to be a notably more moderate month than those earlier in the summer, he said, so for now the utility is making only minimal spot purchases for cooling load and storage, where accounts inch ever closer to full.
Transportation is running smoothly, the buyer went on, so it’s a pretty quiet market period until mid-September when TGT conducts deadweight testing at its storage fields.
He doesn’t expect to buy any new baseload gas for September, figuring to supplement summer term contracts in the daily market as necessary. So the company likely will be getting few if any bidweek offers from suppliers.
An addition of six onshore rigs to gas-directed drilling activity during the week ending Aug. 19 was partially offset by a two-unit reduction in the Gulf of Mexico, the Baker Hughes Rotary Rig Count said. Its new tally was 900, up a net four from the preceding week. Baker Hughes said the current count is 1% higher than a month ago but down 9% from the year-earlier level.
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