The overall market Tuesday was flat, but modest strength at Northeast and eastern points offset the more than a handful of Rockies locations which traded anywhere from a couple of pennies to close to a dime lower. A Connecticut nuclear outage was expected to ripple through the markets Wednesday. At the close of futures trading September had risen 10.5 cents to $2.834 and October was up 10.3 cents to $2.871. September crude oil gained 70 cents to $93.43/bbl.
A Great Lakes marketer said he was not doing a lot of buying in the spot market. “We went in pretty heavily at index and some of our customers’ usage is coming in less than we expected. We just haven’t had to buy very much this month.”
In spite of the index purchases the marketer said he didn’t think he would be having to sell any of his index gas by the time the end of the month rolled around. “The plan is to look ahead to September and October and there are injection limits imposed by the utilities, but if we look at what we think we will have at the end of August and then add what we can inject during September and October we should be coming to a near-balanced position for our customers.”
Quotes on Michcon and Consumers rose by about a penny and gas into the Chicago Citygates was also a penny higher. Deliveries on Alliance Pipeline were up a penny as well.
At Northeast points next-day gas was steady to modestly higher as a nuclear generating plant in Connecticut reported it had to shut down because sea water used to cool reactors was too warm.
The 871 MW Unit 2 of Dominion Resources’ Millstone Power Station was shut on Sunday because of excessively warm water. Typically water from Long Island Sound is used to cool key components of the plant and is discharged back into the sound. Proper operations require that the water may not be warmer than 75 degrees and following the hottest July on record has been averaging 1.7 degrees above the limit, the Nuclear Regulatory Commission (NRC) said.
Richmond, Va.-based Dominion Resources did not say when the unit will restart. The Millstone plant is just one of the 21 nuclear plants shown as either off-line or producing at less than 100% of full power in the NGI NRC Power Reactor Status Report. The 21 nuclear plants’ generation represents a loss of 8,920 MW out of total U.S. capacity of 100,900 MW generated from 104 facilities.
Traders didn’t see an immediate reaction, but though it might not be much longer before the market reacted. “We have seen a little more buying in that area, but nothing out of the ordinary,” said an eastern marketer.
“Algonquin, and Tennessee 300 L could be affected, but we will probably see something tomorrow [Wednesday],” he said.
Deliveries Wednesday to the Algonquin Citygates added close to a nickel, but parcels into Iroquois Waddington were up just a penny, and gas on Tennessee Zone 6 200 L was a couple of pennies higher.
Other eastern locations showed minimal changes. Tetco M-3 was flat and deliveries to Dominion were up just one cent. Wednesday gas into Transco Zone 6 New York slipped almost a penny.
Quotes in the Midcontinent were little changed as well. Quotes on ANR SW and NGPL Midcontinent Pool were unchanged. Oklahoma Gas Transmission was down a penny and gas on Panhandle was almost 2 cents lower.
Rockies points were weak. At Opal Wednesday quotes were down about 6 cents and on Questar next-day deliveries were close to 8 cents lower. CIG was off a couple of pennies and Kern River shed more than a nickel.
Futures traders heard rumblings that there may have been a nuclear plant down. “We heard rumors, but nothing specific,” a New York floor trader said.
“The rise took out resistance points at $2.81 and if we can hold these levels, $2.97 is the next stop,” he said.
Other traders weren’t sure if the market’s gains would last. “There may not be enough in this advance to last. It’s indeterminate. It could be pattern exhaustion,” said Tom Saal, vice president at INTL Hencorp Futures in Miami.
Saal said the day’s gains were “maybe” a reaction to the nuclear outage, but in his work with Market Profile he cites two value areas higher at $2.978 to 3.110 and $3.143 to $3.197. In Market Profile parlance value areas often act as short term to long term trading objectives.
Prior to today’s [Tuesday’s] advance, market technicians saw the September contract as looking for a near term bottom. “With our first candidate for support in reach for Tuesday’s trading we will be on the lookout for potential bottoming action into the $2.644-2.591 (a=c) zone,” says Brian LaRose, an analyst with United-ICAP. He says that if the market can find support here “we will need to entertain the possibility of bottoming action. Fail to find support into this zone and we will be looking for a continued decline to the $2.350 (1.618 a=c) area from here.”
In spite of revised weather forecasts calling for moderation, “Selling momentum has subsided as the shift in temperature forecasts toward an extended below normal trend appears to have been fully discounted for now,” said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients. In his view “the process of establishing some fresh short term lows will likely be contingent upon a bearish surprise out of Thursday’s EIA storage report. However, odds would favor another significantly downsized seasonal injection, one that could come in about half of average levels. The dynamic of a contraction in the supply surplus is likely to be sustained this week. As a result, pushing values much below the $2.70 level could prove arduous this week even within the context of continued cool temperature expectations.”
In its 2 p.m. EDT report the National Hurricane Center said it was following two systems. One is the remnants of Tropical Depression Seven located near the Nicaraqua Honduras border and it is given a low chance, 10% (down from 20%), of developing into a tropical cyclone in the next 48 hours. The other is a trough of low pressure 900 miles southeast of Bermuda. It is given a 50% (up from 30%) chance of development.
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