Physical natural gas values for Thursday delivery overall on average fell a penny Wednesday. Double-digit losses at some Northeast points were offset by modest changes within a penny or two of unchanged elsewhere. Gulf locations were about unchanged and Rocky Mountain locations were a few pennies on the positive side of the trading ledger. At the close of trading September futures had gained 1.6 cents to $3.460 and October was 1.8 cents higher at $3.491. October crude oil fell $1.26 to $103.85/bbl.

Gulf traders reported that maintenance required to repair damage from a June fire and explosion on a Florida Gas Transmission Louisiana pipeline and compressor station (see Daily GPI, June 19) had been completed and market pricing initially stretched by the mishap had returned to normal.

“The outage pushed the cash market a little bit, but [Florida Gas Transmission] Zone 3 basis has come off a little bit,” said a Florida municipal buyer.

“This is the first little bit of summer we have had, and even it has been a little tame compared to last summer. Last year Zone 3 basis was 20 to 30 cents, but this year it was strange to see double digits.” The buyer forecast that he thought the Zone 3 basis would hold steady at where it was now between 7 1/2 and 9 cents. “September basis traded at 9 1/2 cents, and the market is 8.75 bid at 11 cents for October. November comes crashing down. There is a bid of 2 cents,” he said.

Quotes for Thursday delivery on Florida Gas Transmission Zone 3 were a penny lower at $3.57 and deliveries to the Henry Hub added 3 cents to $3.51. On Transco Zone 3 next-day packages were seen at $3.48, down a penny and on Tennessee 500 L Thursday gas came in at $3.47, up a penny. Gas on Texas Eastern E LA changed hands at $3.45, down a penny.

Processed gas in the Rocky Mountains took a turn higher. According to reports the Enterprise Products Partners LP on Wednesday said unit 1 at the Meeker natural gas processing plant in Colorado would return to normal operations on Friday following a force majeure outage that began in late June. The plant is 100% owned by Enterprise and has a total gas processing capacity of 1.70 Bcf/d, according to the company’s website.

Quotes at Rocky Mountain points rose. Gas for Thursday delivery at the Cheyenne Hub was seen 2 cents higher at $3.41 and deliveries to the CIG Mainline rose 3 cents to $3.37. Gas at Opal rose by 2 cents to $3.41, and packages on Northwest Pipeline Wyoming were flat at $3.34. Deliveries to El Paso non-Bondad rose a penny to $3.45.

Thursday’s Energy Information Administration storage report is again expected to show injections above historical norms, but if last week’s performance is any indication, the market may be ready to move higher anyway.

“We’ve heard a number of 69 Bcf and the last year was 43 Bcf and the 5-year average is 56 Bcf. We could get a bigger number than expected and the market could still rally,” said a New York floor trader.

Ritterbusch and Associates is looking for a build of 70 Bcf and Citi Futures Perspective analyst Tim Evans is expecting a 77 Bcf increase. A Reuters poll of 24 analysts revealed an average 69 Bcf with a range of 61 Bcf to 80 Bcf. Industry consultant Bentek Energy forecasts an increase of 60 Bcf utilizing its flow model.

Weather forecasts turned slightly more supportive. Commodity Weather Group expanded its forecast of above to much above normal temperatures from Montana to Lake Ontario and as far south as North Texas. “The European model guidance overnight shifted stronger with Midwest warming next week and also into the 11-15 day,” said Matt Rogers, president of the firm. He noted a disparity between the European and American weather models and said, “The European model pattern is more consistent with the current situation seen this week, so it is again favored. This leads to warmer changes with low 90s in Chicago early to middle next week.

“The situation still looks warm in the 11-15 day for the Midwest per the Euro and Canadian ensembles, but wetter weather offers more limits by that point to high temperatures. Texas edges slightly warmer for next week and in the 11-15 day, but no major heat anomalies are expected. The West is mixed, but California is warmer in the short term, and we are watching some Southwest monsoon cooling risks days four to six.”

The recent strength in prices hasn’t convinced technical analysts that a meaningful move higher or lower is imminent. According to Brian LaRose, a technical analyst with United-ICAP, “To solidify the case for a bottom being in place at $3.129, $3.565 must be decisively breached. Accomplish this and we will have a strong case for a seasonal cycle low being in place.”

He said the bearish case is also alive and well. “Carve out a top in front of the $3.565 level and the down trend has the potential to resume. However, to confirm a dump to $2.932-2.795 is possible form here, $3.184 will need to be broken.”

Addison Armstrong in his morning commentary suggested that “strengthening demand fundamentals in the coming week could thrust the market above that level [$3.50] in the coming days as the momentum from the recent 10% rally may trigger more short-covering and fresh technical buying.”