While traders digested the news of an unusual net decline in storage in the middle of the traditional injection season, cash prices rose Thursday at most points. The continuation of hot weather in many regions and a screen spike on Wednesday were the chief instigators of the overall rally, but bullish anticipation of a low storage injection or possibly even a withdrawal likely also played a part, one source said.

Several flat to a little more than a nickel lower numbers — all in the West — missed out on the renewed price firmness. Otherwise, gains ranged from about a nickel to around half a dollar. Only a few points — again, all in the West — failed to make double-digit advances. Most of the largest upticks were concentrated in the Gulf Coast and Northeast.

A couple of traders speculated that the Energy Information Administration’s report of a 7 Bcf withdrawal for the week ending July 21 could be a signal that a price crash in the next couple of months, when many storage operators supposedly will start hanging out “No Vacancy” signs, may not come to pass after all. Nymex traders responded by sending the expiring August natural gas futures contract up 15.5 cents on the day to $7.042. However, that represented a pullback from earlier screen bullishness that had the contract trading as high as $7.250 at one point.

The inventory drop wasn’t totally unexpected, as both Bentek Energy and Global Insight had projected a net draw of 3 Bcf. And Southern and El Paso have reported storage declines in the past couple of weeks or so (see Daily GPI, July 27). Northwest chimed in Thursday, saying that as of July 25 its Jackson Prairie facility had a working gas volume of 18,889,211 dekatherms (total capacity is 22,488,367 dekatherms). As recently as July 19 Jackson Prairie had 20,127,084 dekatherms stashed away, according to the Northwest bulletin board.

Although parts of the West are cooling off a bit from a prolonged heat wave and most other areas are seeing normal midsummer temperatures, there is still a fair amount of power generation load for gas to go around. Highs of 90 and above will be common Friday from the South through the Midcontinent, Midwest and Great Plains and into the Rockies, desert Southwest and interior California.

The modest softness in the West resulted primarily from a shifting supply situation. Low linepack conditions or similar issues that had dominated western markets earlier in the week were being resolved in some cases. El Paso was able to cancel a Strained Operating Condition notice Wednesday, the same day it was implemented (see Transportation Notes). And Kern River, which had previously been reporting low linepack in its three farthest downstream segments, said Thursday linepack had returned to normal in those segments and gone to a high level in the farthest upstream segment.

Despite California starting to get a slight break from nearly two weeks of torrid heat, gas flows into the Golden State were rising significantly Thursday. Volumes at the Southern California border were up 8%, or 209,000 MMBtu/d, and the PG&E citygate saw an increase of 2%, or 75,000 MMBtu/d, according to Bentek Energy’s analysis of natural gas hub flows (https://intelligencepress.com/features/bentek/). Conversely, although Florida Gas Transmission extended an Overage Alert Day for its market area into its fourth day, nominations at the Florida citygate for Thursday plunged 8%, or 162,000 MMBtu/d, Bentek said.

There was a “crazy” run-up in cash quotes after the storage report came out, said a Houston-based marketer. Prices moved up 15-20 cents in late deals, he said, but of course most cash business had already been completed prior to the report. Some people are being required to pull interruptible gas out of storage, while others likely are preferring to use storage instead of paying rising prices for new supply, he said. He agreed that a storage-induced crash may not come after all.

Chicago citygate basis for August continued to strengthen Wednesday, but retreated to around minus 25 cents Thursday, the marketer continued. Often when the screen is rising or falling, basis will adjust to compensate, he said. He thought most August business was getting wrapped up Thursday. A lot of people had already finished their bidweek deals before Thursday, he pointed out, adding that he was “kind of wishing now” that he had done his trading for August last week.

A western marketer said he was “putting the finishing touches” on bidweek Thursday afternoon. Index-based deals has been all over the place, he said — flat, discount and premium. Indexed Malin deals started at NGI flat, fell to minus 7-8 cents Tuesday and Wednesday, but were up to plus 7 cents Thursday, he said. Sumas was at index plus 4 cents Tuesday, but spiked to as much as plus 20 cents Thursday after getting as soft as minus 4 cents in between. Nearly all index premiums “were stout today,” he said.

That storage report had everybody on the run afterward, the marketer commented. He also thinks storage withdrawals have been spurred by recent price strength. It’s cooled off a little in the West, he said, and as a result there seemed to be more gas available Thursday than earlier in the week.

A Northeast utility buyer said his company is not buying any baseload for August, but instead will rely on term gas and daily purchases. One reason is that its storage accounts continue to approach their capacity limits, he said. He reported encountering a few minor problems in working around several maintenance-related Tennessee constraints in the production area.

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