Swing prices moved lower again Tuesday despite hints that cooling demand will be rising slowly in the next few days. New declines were fairly moderate in the East, ranging from barely lower to just shy of 15 cents, with a majority of points falling less than a dime. Declining weather load caused western markets to record bigger losses from a little under a dime to slightly more than 20 cents.
The natural gas contract for August joined in general energy futures gains, but the gas screen’s gain of a little more than 3 cents failed to elicit any predictions of a cash market rally. A downturn in unleaded gasoline was the sole setback among Nymex’s energy offerings.
A Northeast utility staffer said it felt like more buyers were active in the market Tuesday than the day before, even though prices still fell again. The forecasts are indicating hotter weather down the road, although it won’t be until Thursday at the earliest when “significant” warmth returns to his region, the buyer said. He noted that Niagara numbers fell a bit further than most Gulf Coast pipes, prompting him to shift supply sources. “Yesterday [Monday] we were buying Gulf Coast gas, but today [Tuesday] the spreads favored buying at Niagara,” he said.
Most of the remaining normal summer heat levels continued to reside in the far West from the desert Southwest through inland California into the Pacific Northwest. But overnight temperatures have turned chilly in the Rockies and daytime highs are merely comfortable, resulting in a glut of available western supplies. Kern River continued to report high linepack in all segments Tuesday.
A marketer commented that mid 80s highs in North Texas made it feel more like fall weather than summer. The Lone Star State’s electric utilities were buying little if any new swing gas, she said.
A Midcontinent trader had a similar report. It was getting warmer in the Lower Midwest, but remaining relatively mild in the low to mid 80s, he said. That meant his company was seeing almost no power generation load because it wouldn’t be economical to run most gas-fired peaking units.
Lehman Brothers analyst Thomas Driscoll said he expects the Energy Information Administration to announce a storage injection of 85 Bcf for the week ended July 23.
A marketer said index-based pricing for August weakened Tuesday, but he was not seeing much difference from Monday in fixed prices. For example, he said, Chicago citygates traded at index minus 1.5 cents Monday, but Tuesday it was “mostly around index minus 4 [cents], and I saw some minus 5 deals get done.” Chicago deliveries were in the mid $5.90s at fixed prices, and physical basis got a little stronger at plus 2 cents, he said.
Another marketer who trades the West and Midcontinent provided these samplings of August numbers Tuesday: Waha low to mid $5.70s; Transwestern Permian mid $5.50s; Southern California border low $5.80s; ANR Southwest in a tight range on either side of $5.70; Panhandle Eastern also on either side of $5.70 but in a slightly wider range; and NGPL Midcontinent mid $5.60s. Bidweek prices seemed to try to follow crude oil futures higher Tuesday but failed, she said, adding that she also couldn’t discern any significant August price movement from Monday.
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