The rise in cash prices — prompted by widespread heat waves and a lengthy string of futures advances — continued Wednesday, but signs were surfacing that Wednesday likely represented the market’s peak this week and softness would be setting in Thursday.
Most points again recorded double-digit gains, but quite a few — primarily in the West and Midcontinent — were smaller than on the previous day. Overall, the upticks ranged from about a nickel to 40 cents or so.
High heat levels will remain through Thursday in the Northeast, South Midcontinent and much of the West, especially in the Pacific Northwest, where Portland, OR may record a date-specific record with temperatures approaching 100 degrees, according to The Weather Channel. However, a cooldown into the 70s will be in effect in the Upper Midwest and parts of the central Plains, with the Northeast due to follow with some moderate relief from the heat on Friday.
In addition, the screen’s six-day streak of run-ups came to an end Wednesday as natural gas futures finally relapsed with a fall of 2.7 cents. They were joined by plunges in Nymex’s oil-related offerings, where crude hit a prompt-month intraday record of $62.50 but wound up plunging a little more than a dollar to $60.86/bbl following bearish government inventory reports.
Other hints of an impending bearish turn in the cash market came from ANR and Columbia Gulf (see Transportation Notes). After assessing its current and projected storage inventory, ANR told DDS and MBS customers that it will be unable to allow any further net injections through the Oct. 31 end of injection season. And Columbia Gulf referred to gas quality issues in saying that it will cease taking nominations for Egan Hub Storage in South Louisiana on Friday until further notice.
The moves by both pipelines mean that some Gulf Coast and Midcontinent supplies will be deprived of potential placement destinations starting Friday.
Meanwhile, blistering temperatures continued to plague the Northeast, causing peak quotes for Transco Zone 6-New York City to approach $10. The situation in Ontario was bad enough to compel the province’s Independent Electricity System Operator to declare a “power warning” (see story in Power Market Today).
As if to affirm a government agency’s raising its forecast of 2005 Atlantic hurricane season activity a day earlier (see Daily GPI, Aug. 3), Tropical Storm Harvey developed Wednesday. However, much like predecessor Franklin, Harvey posed no threat to Gulf of Mexico production because the National Hurricane Center said at 5 p.m. AST Harvey was about 165 miles west of Bermuda and moving farther out into the Atlantic on an east-northeast heading.
“[T]his is the earliest on record [in a single season] that eight storms or hurricanes have occurred,” The Weather Channel observed. “Records go back to 1851.”
A fire on Transco near northeast Houston burned itself out in four hours with no injuries being reported (see related story). The incident occurred when gas being vented from the 30-inch line ignited accidentally, the pipeline said.
A Northeast utility buyer reported that prices came off almost 40 cents from their early highs after the crude oil and distillate inventory reports came out, which is usually a good indicator of price movement on the following day. It looks like the recent steady run-up in cash prices will be coming to an end Thursday, he concluded. The buyer said his region would have another hot day around 90 degrees Thursday, about the same as on Wednesday, before getting some relief with highs going down into the mid 80s Friday.
The National Weather Service (NWS) expects normal temperatures in most of the U.S. during the Aug. 8-12 workweek. It looks for above normal readings in the Northeast, Mid-Atlantic and Midwest, along with Missouri and most of Nebraska and Kansas. NWS predicted below normal conditions everywhere north and west of a line running eastward from central California through southern Nevada and Utah before curving northward into central Wyoming and eastern Montana.
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