It was a tale of two markets for the four-day July physical natural gas trading week that ended on Thursday. Gains in the Northeast separated themselves from the rest of the market with an overall advance of 43 cents to average $2.27, thus lifting the NGI Weekly Spot Gas Average by a dime to $2.70. Outside of the Northeast it was a different story with prices mired in a narrow trading range less than a nickel either side of unchanged.

Of all actively traded locations, market points in New England proved that they could be more than just an extension of the Marcellus in times of low demand, and posted the week’s greatest gains as much of the region saw extreme heat during the week. Deliveries to Algonquin Citygate rose $1.25 to average $3.42 and gas on Tenn Zone 6 200L gained 98 cents to $3.16. Transco Zone 6 NY was also in the mix with a gain of $1.01 to average $2.95. The week’s greatest loser came out of the Rockies with Kingsgate sliding 11 cents to average $2.64.

Regionally East Texas saw the greatest losses dropping 4 cents to average $2.80, and the Midcontinent shed 3 cents to $2.76.

South Texas, South Louisiana, and the Rocky Mountains all lost a penny to $2.80, $2.84, and $2.71, respectively.

California was unchanged at $3.04.

August futures expired Wednesday at $2.886, up 11.3 cents from the July expiration, while September futures finished trading Friday at $2.716, down 5.9 cents for the five-day trading week.

Analysts saw Friday’s screen move as “light volume book squaring ahead of the weekend in the wake of Thursday’s 3% drop,” according to Tim Evans of Citi Futures Perspective. “The temperature outlook seems little changed overall, with a bit more cooling demand for next week, but somewhat less in the week ending August 14. We continue to see the temperature forecast as consistent with near average storage injections over the next few weekly reports.”

Futures traders Thursday were left scratching their heads as the market made a counter-intuitive move lower following a government inventory report showing a lesser increase in inventories than anticipated. At the close September had shed 9.6 cents to $2.768, and October was lower by 9.1 cents to $2.797.

For the week ended July 24, EIA reported an injection of 52 Bcf. September futures rose to a high of $2.847 after the number was released, but by 10:45 a.m. September was trading at $2.796, down 6.8 cents from Wednesday’s settlement. Market analysts versed in technical analysis were dismissive of the report and focused on recent price action.

“That’s one reason we don’t follow fundamentals. The $2.90 to $2.915 area was a very important area that we needed to get through,” Brian LaRose, technical analyst at United ICAP told NGI. “Clearly, the market failed miserably, and now we have our eyes on the $2.67 level. If we take that level out, I think there is a chance we make a run at $2.55 and even $2.44 in the very short term.”

LaRose, however, remains positive on the market and said he thinks there is a good chance for a second-half rally. “That’s all dependent if the bulls can get their act together, and so far they have failed miserably at every turn. My line in the sand is $2.67. Take that out, and I move to the sidelines. Take out $2.44, and we are looking at $1.60.”

Prior to the release of the data, analysts were looking for an increase in the mid-50 Bcf area. Bentek Energy’s flow model estimated 55 Bcf, and IAF Advisors was counting on a 53 Bcf increase. A Reuters poll of 24 traders and analysts showed an average 54 Bcf with a range of 47 to 59 Bcf.

Evans thought the number “should be seen as constructive if not mildly supportive. There were no reclassification issues this week, and so this is a relatively clean report in that respect. We think it tends to reinforce the idea that we’ve seen enough air-conditioning demand to keep the market in a relatively close balance on a seasonally adjusted basis. This isn’t necessarily supportive, although we think it may qualify as stronger than expected, less than satisfying for those holding short positions.”’s Andrea Paltrinieri was looking for a build of 54 Bcf and said her figure was revised lower because of lower production data last week, otherwise the figure would have been in the high 50s. “In regards to supply-demand, I see 54 Bcf as a bearish number for the overall balance, weather adjusted, and I see EOS at 4 Tcf with normal weather patterns. For supply-demand, I have as a neutral number 48 Bcf, in line with the five-year average. Any number below 47 would be bullish and above 50 bearish! However, since the market is incorporating 53-54 Bcf…we could have some brief upside [Thursday] with any number below estimates. But we need to disentangle market reaction from supply-demand balance.

For the moment it looks like those holding short positions are having the last laugh. “It just looks like there’s a lot of bearishness out there. We were at the lows of the day after the number came out,” said a New York floor trader.

In something of a structural market change gas buyers for PJM power generation have been busy this summer even though temperatures have not hit any records. According to industry consultant Genscape, however, the PJM burn-per-degree has reached levels not seen in years. “Nominated gas burn in PJM reached a summer-, year-, and two-year-to-date high [Tuesday] amid temperatures that have been warm but by no means record hot themselves,” the firm said in a report.

“Gas nominations to power plants reached 5,742 MMcf/d yesterday in the PJM market, a level not seen during the summer strip since July 2013. However, during that period temperatures were substantially warmer, revealing this summer’s actual burn-per-degree is much higher and burn levels will set new records when/if temperatures rise. In July 2013 burn peaked at 6,428 MMcf/d during a period when population-weighted net cooling degree days neared 22 CDDs. When yesterday’s demand peak heat only 15.5 CDDs were registered. This supports a trend that has been in force since late May wherein the region’s burn levels have increased above those at the same temperature in previous years.

“Total burn this summer (from May 1) has averaged 3,839 MMcf/d, its highest since 2012, though CDDs this summer have averaged just 5.8 versus the 8.2 average from summer 2012. Lower gas prices and coal retirements have increased gas use for power generation in the market to levels rivalling and exceeding summer 2012.”

Physical gas traded Friday for weekend and Monday was soft nearly across the country as the recent heat in a number of regions was expected to dissipate. The weakness in the Northeast was also not surprising ahead of the uncertainty surrounding the Aug. 1 initiation of east-to-west flows of gas on the REX Zone 3 expansion out of the Marcellus (see Daily GPI, July 26). The overall physical market on Friday fell 11 cents to $2.54, and losses were widespread, with nary a point making it to the positive side of the trading ledger. The Northeast led the charge lower, but many points posted losses of a dime or more.