Likely in anticipation of much hotter weather in most of the East this week, non-West quotes were only moderately softer in many cases Friday and even included several flat points in the Gulf Coast and Northeast and a small uptick at Iroquois Zone 2.
Midcontinent points saw bigger losses as Midwest temperatures will be slower to heat up, and the West was even softer than that as an excess supply situation threatens to be exacerbated by Northwest ordering the emptying of interruptible accounts at Jackson Prairie Storage Facility by next Friday (see Transportation Notes).
Overall declines ranged from 2-3 cents to about 40 cents.
The Energy Information Administration was slightly higher than consensus estimates centered around 70 Bcf when it reported a storage injection of 73 Bcf for the week ending June 30. Futures traders had a moderately bearish response, sending the August contract 14.1 cents lower on settlement (see futures story).
Nearly all Gulf Coast losses were capped at around a dime, but Florida Gas Zone 3 fell about twice that amount after Florida Gas Transmission ended an Overage Alert Day and cautioned that it might instead need to declare an Underage Alert Day due to heavy rains expected to cool off its market area over the weekend (see Transportation Notes). A Florida citygate quote was down more than 30 cents.
SoCalGas found it necessary to extend a high-linepack OFO through at least Saturday, but its neighbor to the north, PG&E, had no such problem as it projected that linepack levels would stay in about the middle of its desired target range through early this week. After a short-lived respite, temperatures in interior California were starting to rise again. Sacramento’s high of 86 degrees Thursday was replaced by a prediction of 92 for Friday and a further rise to 97 Saturday. The Southern California border fell about 35 cents, while the PG&E citygate and Malin saw smaller losses of a little more than 20 cents.
While other parts of the Northeast would stay mild for a little while longer (Boston was expected to peak around 78 degrees Saturday), the New York City metro area was already starting to feel the warm-up effects, with Friday’s high in the low 80s forecast to be replaced by one of 87 Saturday. A dry weekend in most of the South would allow a slow rise in temperatures outside Florida, but the West was losing most of its high heat levels except in the desert Southwest and interior California.
AccuWeather meteorologist Joe Bastardi indicated that many air conditioners, especially in the East, will get their hardest workouts of the year so far in the next two weeks. In a Thursday morning advisory titled “Major Heat Wave Brewing for Much of Nation Next Week and Week After,” he said it will be possible for Chicago to hit 100 degrees from the middle of this week into the weekend.
In addition to all the other recent news about restrictions on storage injections, one trader said National Fuel Gas Supply was not allowing any excess injections into storage. “Only previously contracted nominations are being accepted,” he said.
A Midcontinent producer perceived a very slow market Thursday and Friday. He agreed that the East’s overall mild softness was probably due to the likelihood of significantly higher temperatures being in place or in the process of rising early this week. He suspected that people were stocking up on storage gas in expectation of a price rally.
Noting the burgeoning storage inventories in Michigan (see “Hub Flows” below, the producer said there is no underground storage in Wisconsin, so on summer weekends when there’s usually a sizeable drop in gas in the state, gas will often try to migrate through the Chicago Hub into Michigan. However, that opportunity may be fading pretty soon, he said.
The weather was still “mighty fine” Friday for one Northeast utility buyer. Company throughput was “very low” as a result, he added. “I’m sure there’s a little power generation going on behind our system,” but essentially it’s not enough to cause a blip on the radar scope, he said. “We’re just going with baseload and trying to levelize our storage nominations.”
Expect making deals with Calgary-based traders to be a more hurried affair than usual in the coming week. The Calgary Stampede rodeo began with a parade Friday, and many of the city’s traders will be finishing morning transactions quickly in order to spend the afternoon in rodeo-related socializing. The event also draws many gas industry folks from the U.S., so some domestic trading desks may be slightly depleted.
The Baker Hughes rotary rig count (https://intelligencepress.com/features/bakerhughes/) found 1,359 rigs drilling for gas in the U.S. as of July 7. That was unchanged from the count for the previous week, but up 10% from the July 1, 2005 tally, Baker Hughes said. A decline of four rigs in non-Gulf of Mexico operations was balanced by an increase of four in the Gulf of Mexico.
Hub Flows: It’s been noted before (see Daily GPI, June 26), but Michigan Consolidated Gas citygate volumes continue to drop precipitously as storage facilities in the state near “full” status (and of course, also due to mild summer weather in the Midwest). Nominations for Friday’s MichCon deliveries were only 150,000 MMBtu/d, down 51,000 MMBtu/d from Thursday’s level, according to Bentek Energy analysis of hub flows at 14 trading points (https://intelligencepress.com/features/bentek/). Its figures show that Friday’s MichCon volume was less than a fourth of the month-to-date average of 628,000 MMBtu/d recorded in July 2005.
Bentek also reported that the Florida citygate dropped 100,000 MMBtu/d (5%) Friday, which was expected with a lot of rain due to cool off the Sunshine State over the weekend. That prompted Florida Gas Transmission to end an Overage Alert Day and caution shippers that an Underage Alert Day might be needed in the near future (see Transportation Notes).
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