Forecasts of rising heat levels across much of the East, combined with existing triple-digit high temperatures in the Southwest and parts of the Upper Plains plus good prior-trading day futures support, led to price spikes at all points Monday except for a few in the Rockies that were flat to nearly 20 cents lower. Most Northeast citygates saw dollar-plus increases, although regional highs in the 90s won’t be coming along until around midweek or later.
The price advances that dominated Monday’s trading ranged from about 16 cents to $1.15 or so.
Besides hotter weather, a small increase in tropical activity may have given the cash market a slight extra boost. “We’re particularly interested in a tropical wave east of the Caribbean that has shown signs of increased convection and circulation,” said Citigroup analyst Tim Evans in his Monday morning advisory. “Conditions are not necessarily optimal for further development, but we note this system is pointed toward the Caribbean and the Gulf of Mexico beyond, and with a large expanse of warm water in front of it.”
The cash market for end-of-July flows had good support from last Friday’s 16.7-cent expiration-day advance by August futures, and the August aftermarket will be launched Tuesday with even stronger positive screen guidance from September futures making their prompt-month debut with a 29.1-cent gain.
One reason for the Rockies softness was the reemergence of excess supply issues. Kern River reported systemwide high linepack Monday. However, PG&E had a high-inventory OFO in effect for Saturday only.
“I just don’t understand what it is behind these soaring Northeast prices,” said a regional marketer. It will be getting hot enough later in the week to justify those kind of spikes, he added, but the Northeast will still be relatively comfortable Tuesday, according to The Weather Channel.
The marketer said he did know that Northeast power generators were out buying gas “aggressively” Monday, and there was also some incremental intraday load, so maybe there are some nongas-fired generation units down for maintenance that he was unaware of. Also, part of the reason for the price spikes was because of people coming out short from the weekend market due to a mini-heat wave north of Boston, he said, and needing to buy gas to resolve month-end imbalances. And Tennessee citygate deliveries are lower than usual due to maintenance along its system, he added.
This has been “one of the most miserable ever,” the marketer continued. There was almost no buying interest whatsoever, and basis kept getting weaker as August trading progressed, he said. The market should be seeing some pretty big declines in first-of-month indexes, he said.
He was not aware of anyone still trading August baseload Monday; undoubtedly there may have been some loose ends getting taken care of, he said, but almost everybody finished making August deals prior to the weekend.
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