A gain of slightly less than a cent in September futures a day earlier failed to keep nearly all of the cash market from softening Thursday. Some Atlantic tropical activity was going on but posed no near-term threat to offshore gas supply, and weather patterns have subsided to largely seasonal or slightly milder conditions for the time being.
Flat to about a dime higher locations were relatively few and scattered, although unchanged numbers ruled in Western Canada. A large majority of points recorded declines from 2-3 cents to about 20 cents, with Northeast citygates leading the descent as they often do.
A lot of people were surprised when the Energy Information Administration reported one of the first considerably-below-expectations storage builds in a long time. Its count of a 25 Bcf injection during the week ending Aug. 5 was about 10 Bcf below consensus estimates in the mid 30s Bcf. Nymex traders quickly showed a bullish response in sending September futures to a gain around 7 cents soon after the report and eventually closed the day with an advance of 10.5 cents (see related story).
Producing area injections likely were held back by record-setting power generation load in Texas last week, as proclaimed by the Electric Reliability Council of Texas.
The record-setting heat wave that had gripped the U.S. for much of this summer has retreated to a large degree, leaving peak temperatures in the area of 100 degrees or higher largely confined to the south-central part of the nation through much of the desert Southwest. It’s not surprising at all that the South is still hot in August, but highs in the low to mid 90s are actually on the moderate side. Meanwhile, readings topping out in the mid 80s or lower from the Northeast through the Midwest and into much of the West (excepting 90 or higher in parts of inland California) are contributing little in the way of power generation load, especially with the West continuing to enjoy an abundance of hydropower this summer.
Disorganized showers and a few thunderstorms associated with a low-pressure trough between the Carolinas and Bermuda had only a 10% chance of tropical cyclone development in the succeeding 48 hours, the National Hurricane Center (NHC) said Thursday afternoon. It accorded higher odds — 40% — of strengthening to two low-pressure systems that were still remote in the eastern Atlantic off West Africa (see related story). One was about 750 miles west of the southern Cape Verde Islands and the other was about 275 miles south of the southern islands, NHC said.
Except for Kern River starting to report low linepack (see Transportation Notes), Tennessee’s Imbalance Warning in Zones 5 and 6, Southern’s capacity allocations in two east-end delivery groups and the ongoing limits of Bison capacity remained the only notable transport restrictions.
The CIG-Henry Hub basis spread stayed steady at around a quarter, although the approximate 30-cent gap between the hub and Transco’s Zone 6-New York pool tightened by a couple of pennies or so.
IntercontinentalExchange (ICE) reported the Chicago citygate dropping about a nickel, while volumes traded on the ICE platform fell about 100,000 MMBtu from 846,800 MMBtu Wednesday to 746,700 MMBtu Thursday. The Southern California border fell slightly further by a little more than a nickel, ICE said, but activity at that point skyrocketed from 654,700 MMBtu to 897,500 MMBtu.
Despite Wednesday’s overall small price gains, Bentek Energy’s U.S. Natural Gas Hub Flows chart found nominated volumes for Thursday falling at 13 of the 23 trading points it covers, with another three locations seeing flat activity. Major declines occurred at four points, Bentek said: Texas Eastern M-3, down 410,000 MMBtu (16%); Columbia Gas, down 219,000 MMBtu (7%); Transco Zone 6, down 194,000 MMBtu (13%); and the PG&E citygate, down 107,000 MMBtu (5%). Big upticks were recorded at only MichCon, up 204,000 MMBtu (18%) and the Florida citygate, up 162,000 MMBtu (5%).
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