Prices recorded gains at all points Thursday, with nearly all of them in double digits. Sources cited the previous afternoon’s run-up in energy futures as the chief price booster, since air conditioning demand remained on the relatively mild side for mid-summer in the key Midwest and Northeast market areas. Increases were remarkably consistent across the market spectrum; few were less than a dime, and a majority ranged between about a dime and a little more than 20 cents.

However, few gave the overall rally much chance of being extended. The Energy Information Administration(EIA) reported Thursday morning that 64 Bcf was added to U.S. storage inventories last week, and futures traders obviously took that as a bearish volume since they sent the August natural gas contract to an eventual loss of 14 cents on the day. Just as day-before screen strength gave cash a boost Thursday, so shall the reversal drag cash lower Friday, a couple of traders predicted.

“I am a little surprised by the Nymex reaction to the storage number,” a marketer said. “It [64 Bcf] was within the expected range but pushed the screen down anyway. I guess it was at the high end of expectations.” Another source noted that although the volume did fit within previous-expectation ranges, there had been some shift of sentiment Wednesday towards a number less than 60 Bcf (see Daily GPI, July 25), and thus the actual report was deemed bearishly high.

The Northeast is due to see a return of hot weather Saturday after a three-day respite, a marketer noted, but he didn’t think the temperatures would be getting high enough to offset the effect of Thursday’s Nymex weakness and the slump in industrial demand that accompanies a weekend period.

There was no fundamental weather support behind Thursday’s upticks, according to a Midwestern utility buyer. “Cash was up early but falling after the storage report came out,” she said. Forecasts call for high temperatures in the 90s and potentially the 100s from South Texas through the lower Midwest over the weekend, “so we might see some price strength Friday,” she added, but allowed that it’s kind of a toss-up.

Much as on Wednesday, Rockies, Pacific Northwest and Western Canada points saw the most strength, garnering the lion’s share of upticks of 20 cents or more. Power generation load remains fairly high in the Pacific Northwest, traders pointed out. A producer reporting intra-Alberta numbers in the C$2.70s noted that NOVA receipts had been off Wednesday (Thursday’s results wouldn’t be known until Friday). “Typically the system draws 11.6-11.8 Bcf/d, but yesterday [Wednesday] came in at 11.2 Bcf/d,” he said. There was a net withdrawal of gas from Aeco storage that day, the producer added.

“Day trading was pretty active,” a Midcontinent producer commented. “Thursdays have been compressed ever since the EIA took over reporting storage. People want to get done before 9:30, which keeps traders from dilly-dallying.”

A Northeast marketer reported these basis deal numbers as bidweek got under way: Transco Zone 6 (New York City), plus 43 cents; Zone 6 (non-NYC) plus 32 cents; and Texas Eastern M-3, plus 33.5 cents. A utility buyer quoted a purchase in Florida Gas Transmission’s Zone 3 at plus 3 cents, saying the basis was so strong “because Zone 3 gas has a lot of [destination] options in the market,” especially with Transco and other pipes to the Northeast.

A producer said he had averaged C$2.80 for August intra-Alberta sales Thursday, but that the prices were on a downward trend along with the screen. After starting at C$2.90 in the morning, provincial numbers had come off to the low C$2.70s by the afternoon, he said.

Continuing the discussion about much of the energy sector being savaged by credit rating analysts recently, a marketer made this observation: “When the infrastructure doesn’t get built in the next few years, they may realize that energy merchants and pipeline companies were needed.” The market is not nearly as efficient as it used to be, he went on. It’s been noted before that bid-ask spreads have been widening since the credit crunch began, “but the effect [of widening] has gotten notably greater this week” while bankruptcy speculation began building around some companies.

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