Reduced cooling load due to cold fronts in both the Northeast and Midwest Thursday made Tuesday’s overall rally a short-lived one. Prices fell at most points Wednesday, generally by moderate amounts in the East but by larger amounts in the West.

Rockies spikes of up to nearly 75 cents, along with a few other smaller gains in the Northeast and Gulf Coast, extended the latest streak of mixed price movement. Near-flat quotes were common at eastern points as Wednesday’s losses ranged from a couple of pennies to nearly 35 cents.

Because the transition to July occurs on a Sunday, Thursday’s trading will be for June 29-30 flows and Friday’s trading will be for July 1-2 flows.

On their last day of trading July futures ended a seven-session string of down days with a gain of 5.2 cents to $6.929, which will give Thursday’s cash market a modicum of prior-day screen support. However, at least one source expects weakening weather fundamentals to erode prices further. He also pointed out that the weekend decline of industrial load will be partially in play Thursday.

Wednesday’s trading marked the first time in five months that a prompt-month futures contract has failed to settle in the $7.50s (see related story).

The Rockies market scored big upticks due both to regional warming trends and partial resolution of excess supply/transport constraint issues. Denver, which recorded a high of 79 degrees Tuesday, is expected to peak in the high 80s Thursday. PG&E is ending a two-day high-inventory OFO Thursday, while Northwest expected to complete anomaly investigations and lift the associated Declared Deficiency Period Wednesday evening, two days earlier than expected (see Transportation Notes). And Kern River, which had been reporting high linepack systemwide in the previous two days, said linepack was high only in the farthest upstream (of four) segments Wednesday.

Northeast cities that had seen daily highs in the 90s as recently as Wednesday will start scaling back to the 70s behind a cold front moving into the region Thursday. The Midwest will see a similar cooldown, with Chicago’s expected high of 87 Wednesday due to fall into the mid 70s Thursday. The South will remain fairly hot for the most part, but lots of rain will dampen temperatures at the region’s western end. Hot weather is in store for much of the lower West, but the Pacific Northwest will not get above the 70s.

A Midcontinent producer said cooler market-area temperatures Thursday caused drops at all the points he trades. He was impressed with ANR-Southwest being “really strong” compared to Panhandle Eastern (ANR carried a premium of about 30 cents Wednesday) and agreed with another producer’s contention that supplies from Cheyenne Plains likely were displacing a significant amount of gas into Panhandle (see Daily GPI, June 25). He also suspected that a recent reduction of Cheyenne Plains interconnect capacity into ANR (see Daily GPI, June 26) was at least partly responsible for the relative ANR strength.

Generally, bidweek prices were nearly unchanged from Tuesday’s levels, the producer continued. However, he saw Michigan citygate basis get stronger largely in response to firming basis at the Dawn Hub. Dawn had traded at basis of plus 10.5 cents Tuesday but was getting bid at plus 12 cents Wednesday, the producer said. He reported buying MichCon at plus 7.5 cents Wednesday and selling the citygate at plus 8.25 cents. He also sold at the Consumers Energy citygate at plus 8 cents.

He attributed the stronger basis to a lot of people thinking the screen was going to “dump” Wednesday and thus bidding at higher basis. They must have been surprised by the expiration-day gain, he said. Obviously with the July settlement down more than half a dollar from June, indexes should be considerably weaker for the coming month, he added. His company is currently pegging the Chicago index at $6.83, he said.

In its forecast for the July 2-6 workweek, the National Weather Service (NWS) looks for above-normal temperatures in nearly all of the West, extending as far east as all of North Dakota in the north and the western edge of New Mexico in the south. It also predicted above-normal readings in most of the Southeast, excluding normal conditions in the lower third of the Florida peninsula, eastern North Carolina, the western half of Arkansas and all of Louisiana and Virginia. NWS expects below-normal temperatures in the Northeast, the western half of Kansas and all of Texas and Oklahoma except in strips along their eastern edges.

Bentek Energy expects an 82 Bcf storage injection to be reported for the week ending June 22. A Reuters survey of 23 industry sources found an average expectation of an 83 Bcf build. Estimates ranged from 75 Bcf to 90 Bcf, the news service said.

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.