The cash market again bowed to a general lack of substantial cooling load and further prior-day futures softness in recording losses at all but one point Thursday. Modest warming trends in the Rockies and western Midwest were due to spur little additional power generation demand for gas.
A flat Florida citygate repeated as the sole exception to losses ranging from about a nickel to about 20 cents. Most of the declines exceeding a dime were in the Northeast and Rockies.
The Energy Information Administration report of a 71 Bcf storage injection for the week ending July 24 was toward the lower end of prior expectations and slightly less than consensus estimates. Nymex traders responded bullishly, though, in sending September natural gas futures 19.5 cents higher in their debut as the prompt-month contract. The gas traders likely also got some buying inspiration from a crude oil spike that was accompanied by significant strength in Nymex’s other petroleum product offerings (see related story).
As has been the case for some time, Florida, the Pacific Northwest, Texas through the desert Southwest and inland California constituted the chief source of serious heat in the market. And the Pacific Northwest was due to see a cooldown Friday to highs on either side of 90, although The Weather Channel (TWC) pointed out that regional conditions, while not as hot as before, would still be above average through the weekend.
An upper-level trough produced a divided forecast for the Midwest, TWC said. The western half will be warming quite a bit but still getting no higher than the low 80s, and that will be offset quite a bit by cooling trends in the eastern half that will have some locations such as Cleveland peaking in only the mid 70s. The Northeast will see relatively little change in peak temperatures from the mid 80s to around 90, but they will remain above normal.
A forecast of Florida highs in the mid 90s prompted Florida Gas Transmission to keep an Overage Alert Day (OAD) in place through at least Thursday, and that again made the Florida citygate the single odd market out amid overall softness. But whereas the OAD had produced a citygate spike of 35 cents Wednesday, it was only able to keep the trading point flat Thursday.
Otherwise, most of the South east of Texas and the New Orleans area will continue to see subpar heat levels in the 80s.
After reporting low linepack for the previous couple of days, Kern River said linepack had returned to normal systemwide Thursday. Meanwhile, El Paso said it was experiencing high linepack.
Trading for the first day(s) of a month tends to be a little more volatile than usual, a Texas-based marketer said, and that provides a good chance of Thursday’s strength in futures being able to induce a small gain in weekend cash numbers Friday. His company’s forecasters say the Northeast will remain unusually warm the next several days, then cool down around the middle of next week.
Saying he expects a first-of-month Chicago citygate index around $3.48, the marketer added that he perceived a large swing in Chicago basis during bidweek. It started around minus 7-8 cents, he said, but appeared to have firmed up to around plus a dime by the end of trading Wednesday.
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