Despite the National Hurricane Center (NHC) providing greatly enhanced odds of a tropical storm or hurricane named Alex entering the southern Gulf of Mexico by early this week, prices saw small losses at nearly all points Friday.

A small futures decline a day earlier, along with the usual industrial demand decline during a weekend and forecasts of milder temperatures in northern market areas as the middle of this week approaches, likely were most responsible for Friday’s overall cash softness.

Most points were flat to down about 55 cents. Although Florida Gas Transmission continued an Overage Alert Day (see Transportation Notes), the Florida citygate’s top loss was a market aberration, as other losses were capped around a dime or less.

Malin and the PG&E citygate only recorded flat to slightly lower numbers despite the utility issuing a high-inventory OFO.

Although the cash market seemed to shrug off the tropical storm forecast, Nymex traders sat up and took notice as they pushed July futures 11.3 cents higher on the day before the contract expires (see related story). Petroleum-based futures also recorded major increases Friday.

NHC said Friday afternoon satellite images and surface observations indicated that a “low-pressure area” between the northern coast of Honduras and Grand Cayman had become better organized, and upper-level winds were becoming more conducive for development. A tropical depression likely would form by Saturday, NHC said, and it accorded the system a “high chance” (80%) of becoming a named storm during the succeeding 48 hours. However, the system is expected to traverse Mexico’s Yucatan Peninsula before entering the southern Gulf of Mexico, which likely will weaken its strength.

As if there wasn’t already enough negative tropical activity news for the gas market, NHC said “a large but disorganized area of cloudiness and showers just east of the northern Leeward Islands” was associated with a tropical wave that had the “potential for slow development as it moves toward the northwest” at 10-15 mph. However, the agency awarded this system only a “low chance” (20%) of development into a tropical storm over the weekend.

It was warm to hot, but not terribly searing, said a Midcontinent producer. He considered the higher Nymex numbers as an indication that futures traders were “not concerned about being long” going into the weekend. He looks for Monday trading “to be volatile, probably to the upside most of the day with a big basis blowout for the last day” on July swaps.

A lot of the Monday market depends on how the potential storm moves over the weekend, the producer continued.

It’s quit raining, a Lower Midwest utility buyer said, but her company was still not finding much cooling load, so it was primarily buying gas for storage injections. It was hard to understand why the increasing tropical storm threat didn’t raise prices Friday, she said, “but we’re glad to see softer numbers.”

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