Moderate softening continued to reign in the cash market Wednesday as slow warming trends fail to prompt enough power generation load to turn prices around. A few Northeast citygates were essentially flat with losses of only a penny, while most other points recorded generally small drops ranging from 2-3 cents to a little more than a dime.

However, the Waha/Permian Basin market got hit a little harder, suffering losses of 15-20 cents or so. Not only is the intrastate Texas market staying weak with unusually mild temperatures, said a marketer, but demand from California and East-of-California buyers is dropping a bit as the area of triple-digit temperatures in the Southwest recedes. The marketer said he didn’t have any problem finding swing buyers in Texas, though, even with power generation loads lower than normal. He guessed that storage injection demand must have been taking up the slack.

The August screen saw some expiration-day strength, registering a gain just shy of 6 cents. But that paled in comparison to spikes in the oil-related futures contracts for September. Crude oil soared by just over a dollar to a new daily settlement record of $42.90/bbl after touching the $43.05 level briefly. Traders reportedly were concerned by a possible shutdown of exports from Russian oil giant Yukos. Also, there were conflicting reports Wednesday morning on oil inventories from the Department of Energy and American Petroleum Institute, but both agreed that gasoline stocks had fallen last week, which analysts interpreted as meaning that oil demand will remain strong in the near future.

One source called the oil spike “interesting,” but said he was hearing that Yukos may be able to settle its tax problems with the Russian government, “which would bring crude futures back down in a hurry.”

A Northeast marketer said it would take a while for record-high crude prices to have any impact in gas markets, and that was assuming that oil manages to maintain its new strength. After all, he added, 1% and 0.3% (sulfur content) fuel oil at New York Harbor is still cheaper than gas on a burnertip comparison basis. The Northeast will be getting warmer weather by Friday, he said, but temperatures will rise only into the mid 80s, which wouldn’t spark any significant increase in cooling load. Thus the marketer expected falling gas prices to stick around for a while longer unless a very low storage injection gets reported Thursday.

A Midwest utility buyer said area weather had been mild in the 70s this week, so his company had pretty much quit buying gas for the time being. However, temperatures might be getting as high as 90 degrees by the end of the weekend, he said, which likely would draw him back into the market.

A Calgary-based producer reported that Westcoast’s McMahon Gas Plant is due to come back up Sunday from annual turnaround, adding about 100 MMcf/d into the market. But then the Fort Nelson Gas Plant has its turnaround scheduled for Aug. 3-24, and he expects Fort Nelson to be at 75% of its normal capacity of 700 MMcf/d during that period, which would mean a curtailment of about 200 MMcf/d. The nation’s Heritage Day holiday will be observed Monday, so most Canadians will be trading for four-day flows Friday, likely breaking them up into Saturday-Sunday and Monday-Tuesday segments because of the month-to-month transition, he said.

The producer said he got all his August sales business done around the end of last week, which turned out to be advantageous because basis has blown out since then. “Malin went from basis of minus 25 cents when I did my deals to minus 30-33 cents or so” Wednesday, he said.

A trader of intrastate Texas points said he’s not seeing much loading up on August baseload by end-users, with several telling him they expected to use swing swaps in acquiring incremental supplies. A Midwest utility buyer amplified that perception, saying he didn’t expect to pick up any August baseload supplies and would cover his company’s needs — likely to be fairly meager — in the daily market.

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