Heat makes air and various other gases rise, but it was able todo little if anything to prevent a general rout in natural gas cashprices Tuesday. Decreases straddled the dime level at the greatmajority of points even as heat waves continued to sear much of thenation and sparked some $1,000-plus hourly prices per MWh in somepower markets.
One indication that high temperatures could still have at leastsome impact on gas prices came from dime-or-greater drops inMidwest citygates, where an approaching cold front was starting tobring some weather relief, compared to more modest drops of 5-8cents in the Northeast (which, although a bit cooler, had no coldfront in sight).
A lone bastion of relative strength was Canada’s flat toslightly higher pricing at Sumas and intra-Alberta. Alberta gas wasup to either side of C$2.00, a marketer said, “because we’re stillthrowing 600 MMcf/d to a Bcf a day into the ground” in storageinjections. He estimated provincial storage is a little overtwo-thirds full. Another trader said flat Sumas numbers of justover $1.50 drew their strength from the Alberta demand.
A Gulf Coast marketer saw “nothing in sight” to arrest the crashdive in cash prices. The heat has thrown its best punch and stillcan’t support gas, he said. Another source in the region had noprices to quote, saying, “I’m long and have quit buying.” Butconsidering how far prices were sinking Tuesday, he acknowledgedthat his timing might have been a bit off.
Last month’s situation in which hourly electric pricestemporarily were being quoted in multiple thousands of dollars perMWh showed that such megaspikes in power rates have virtually nocorrelation with gas prices, which barely budged higher. Theelectric market saw a semi-repeat of June’s “madness,” as onesource put it, when prices soared as high as $1,200-1,800/mwhMonday afternoon and early Tuesday morning in the Cinergy, Entergyand Tennessee Valley Authority pools, according to reports.However, those kind of numbers were already retreating by middayTuesday, a trader told Daily GPI. He saw no chance of theultra-high June prices occurring again primarily because theMidwest transmission grid, devastated by storm damage last month,is again intact.
It’s almost certain, however, that many electric utilities werecalling on all their gas peaking units Tuesday. Utilities asgeographically diverse as Duke Power in the Carolinas and WisconsinElectric reported all-time record demand on Monday, and PublicService Co. of Colorado said its demand had peaked at 4,760 MW thatafternoon, just 150 MW shy of available power. Michigan companiesDetroit Edison and Consumers Energy were issuing appeals forcustomer conservation.
Early basis talk for August included Chicago at a relativelyweak plus 2.5-3.5, NorAm-east at minus 4.5, San Juan-Blanco atminus 13-14 and Permian-Keystone at minus 7.5-8.5. One trader saidhe expects Sumas fixed prices on either side of $1.50, about whereJuly incremental prices are currently.
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