Although no major heat waves were on the weather radar outside the continuing one from the south-central U.S. through the Southwest, modest warming trends in the Midwest and parts of the Northeast and South, along with the previous day’s August futures increase of 8.8 cents, were enough to generate price increases across the board Thursday.
Only Empress failed to register a double-digit uptick amid overall gains ranging from about C5 cents to a little more than 40 cents.
The storage addition of 66 Bcf reported by the Energy Information Administration for the week ending July 17 was slightly under consensus expectations. But Nymex traders had a pretty bearish response in sending August futures 24.3 cents lower Thursday, signaling negative guidance for Friday’s cash trading (see related story).
Henry Hub volumes of 763,200 MMBtu traded Thursday on IntercontinentalExchange (ICE) represented a big jump from ICE’s Hub activity of 554,800 MMBtu Wednesday. Hub numbers were up about 15 cents.
Although several sections of the South will return to highs in the low 90s Friday after having dipped into the 80s earlier in the week, that will merely represent seasonal norms. And predicted peaks from around 70 to the mid 80s across the Northeast and Midwest were hardly likely to inspire any significant power generation load for gas. Low pressure and a fading cold front will limit New England highs to as low as the 60s, The Weather Channel said, while readings are not expected to get above the mid 80s as far south as the Mid-Atlantic.
Temperatures are expected to top out on either side of 90 in the Rockies and parts of Western Canada, which is unusually warm for those areas. Otherwise the western weather outlook is largely unchanged: torrid in the desert Southwest and inland California, but fairly moderate along the West Coast and in the Pacific Northwest.
The latest tropical development, while never supportive of gas prices recently, got more bearish Thursday. A broad area of surface low pressure east of the Mid-Atlantic coast was moving to the north-northeast, the National Hurricane Center (NHC) said — that is, away from the East Coast. There was nothing else of significance in the Atlantic Basin, NHC said.
A Rockies producer noted that CIG’s rise to a $3.21 average Wednesday had narrowed its basis spread from Henry Hub to 28 cents. On June 26 the differential was $1.53, he said, but most of the eastern segment of Rockies Express (REX) went into service the following Monday (June 29).
“We may have more to go in narrowing the basis,” the producer continued. “It’s surprising that Wall Street seems totally oblivious to the major benefits that REX is already providing to the Rockies [market].”
The fuel buyer for a utility in the South found Thursday’s significant futures softness “hard to figure.” People were saying the screen was up Wednesday largely based on anticipation of one of the lowest storage injection reports in something like three months, he said. Well, that’s what they got, he added, but for some reason Nymex traders still had a major bearish response.
The buyer said he was hearing nothing about August pricing yet, but his company needs “only a little” gas to put into storage, so it can “pick and choose” from what is available. It already has about 85% of August baseload set in summer term deals based on first-of-month indexes, he said.
One source noted that Henry Hub and the Chicago citygate had traded essentially at parity for the past couple of days, which he didn’t recall happening for quite some time. Usually Chicago prices are at least a few cents below the hub, he said.
©Copyright 2009Intelligence 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.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |