The South was destined to bake under highs from around 90 to a little more than 100 stretching as far west as Arizona, but most of the rest of the U.S. and Canada could expect temperatures ranging from merely warm to chilly. Combined with the previous day’s July futures dip of 17.3 cents, the decline of cooling demand resulted in double-digit price losses across the board Friday.
Besides the typical weekend drop of industrial demand, other bearish factors were the continuing return of nuclear plants from spring maintenance/refueling outages (Citi Futures Perspective analyst Tim Evans said 1,225 MW was being returned to the grid Friday) and the abundant supplies of western hydropower cutting into gas demand for power generation.
Losses ranged from about 15 cents to the 65-cent area. The Northeast, which had been the only market area moving lower a day earlier, had most of the largest drops in Friday’s all-points softness. Transco’s Zone 6-New York pool repeated in taking the biggest price hit, with its average dipping a few pennies below $5 and running only a couple of cents above the non-New York pool.
Prompt-month futures rallied from Thursday’s storage report depression by moving 8.3 cents higher (see related story).
The Atlantic hurricane season continued to see a relatively high amount of early activity, but again the threat appeared to be minimal. The National Hurricane Center was monitoring an elongated trough of low pressure primarily over the northwestern and central Bahamas early Friday afternoon but gave it only a 10% chance of development due to unfavorable upper-level winds.
Floodwaters that had shut in a peak of 31.54 MMcf/d in South Louisiana’s Atchafalaya Basin are receding. The state Department of Natural Resources said that as of Thursday only 31.43 MMcf/d was still being reported offline.
The southern U.S. will be the only really hot region for the time being, but the National Weather Service predicts that after a few days of seasonable temperatures, the lower Northeast and most of the Midwest will see a return of above-normal temperatures toward the end of this week. It foresaw essentially no change in normal to below-normal conditions in the West.
SoCalGas had a new high-linepack OFO in place for at least Saturday. However, Westcoast linepack, while still higher than desired, was starting to decline from excessive levels earlier in the week, the pipeline reported.
A Midcontinent producer said area residents were getting some relief from highs heading down into the mid to upper 80s over the weekend, but they would be “back in the cooker” from Monday through Wednesday. Even with Friday’s declines, prices were still above first-of-month indexes, he said, and all of the Oklahoma intrastate pipes were running close to full Friday.
Noting several other producers that were “drilling away” in the Midcontinent region shale plays, the producer said, “We’ve shifted to oil like many have.”
Reversing an upward trend in the gas-directed rig count over the preceding two weeks, the Baker Hughes Rotary Rig Count said eight units were taken offline during the week ending June 10, leaving a total of 879 on active duty. All of the losses occurred onshore, with the Gulf of Mexico tally unchanged, Baker Hughes said. Its latest count was 1% higher than a month ago but down 8% from the year-earlier level.
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