Even with heat forecasts in most areas remaining on the seasonal to relatively mild side for the middle of one of the hottest months in the year, prices rose at nearly all locations Friday. Largely ignoring the usual weekend downturn of industrial demand, the cash market instead derived most of its strength from the previous day’s below-expectations storage injection report for the preceding week and the subsequent bullish reaction by futures traders.

Only two points (Westcoast Station 2 and volatile Tennessee Zone 4) dropped from about a nickel to a dime. Otherwise, a couple of flat averages joined gains ranging from 2-3 cents to about 15 cents. The mostly single-digit increases were distributed fairly evenly throughout the market, with the Gulf Coast and Northeast recording most of the advances of about a dime or slightly higher.

Futures traders returned to providing negative guidance for the cash market Monday after following up the moderate storage-based price euphoria of Thursday with a decline of 4.8 cents in Nymex’s prompt-month gas contract Friday (see related story).

On Friday the National Hurricane Center (NHC) reported three tropical systems and one tropical depression in the Atlantic Ocean. NHC said the three systems also had the potential to develop into storms over the weekend. The easternmost system was a broad low-pressure system located 525 miles southwest of the Cape Verde Islands and had a 40% chance of development, NHC said. A sharp trough of low pressure was 1,000 miles east of the Leeward Islands and was estimated to have a 50% chance.

Tropical Depression Six, which formed Friday 260 miles north of Bermuda, was moving away from the U.S. mainland, and NHC gave a fourth system situated 700 miles north-northeast of the Leeward Islands only a 20% chance of becoming a tropical cyclone in the following 48 hours.

Hot forecasts in its market area prompted Florida Gas Transmission (FGT) to issue an Overage Alert Day (see Transportation Notes). IntercontinentalExchange said FGT Zone 3 prices jumped more than a dime as a result, but Zone 3 volumes traded on its platform barely inched higher from 116,900 MMBtu Thursday to 126,500 MMBtu Friday.

Try telling it to folks in still-parched and scorched Texas, but severe summer weather has actually eased a bit since the season’s initial two months or so. Outside triple-digit highs remaining in parts of Texas and the desert Southwest, most of the South is “basking” in the low to mid 90s at most. And downright moderate peaks in the 80s and even the 70s would continue to dominate the weekend outlook from the Northeast through the Midwest into much of the West and northward into Canada.

A Midcontinent producer said recent rain had helped cool things a bit in his area, and even though conditions were still fairly hot, he could tell that gas-fired generation load was falling on the Oklahoma Gas & Electric and Public Service of Oklahoma systems. He said it looked like some futures traders were shorting the market Thursday morning prior to the storage report, “and some got caught in a bear trap after the release!” The biggest surprise to him in the report wasn’t the overall number, but instead was the size of the Producing Region’s 21 Bcf withdrawal. “It was hot, but man, that is big in the summer!”

Addison Armstrong of Tradition Energy pointed out that the Producing Region’s pull had set a record for that week of the year.

A western utility buyer generally echoed the producer’s report, saying his area had been fortunate in the last two to three weeks with temperatures reaching “only” the 100s instead of the 110s as is usual for mid-August. “You can appreciate the difference in comfort levels,” he added. The utility is still experiencing strong power generation demand, though, as just about all of the gas-fired peaking units in the region are running, he said.

Looking ahead, Canaccord Genuity analysts said they preliminarily anticipate a 60-65 Bcf injection being reported for the week ending Aug. 12, above last year’s 27 Bcf addition and the 43 Bcf five-year average “amid cooling degree days that are set to come in 11% lower year-over-year and 6% above normal. If our expectation comes to fruition, it will cut the year-over-year storage deficit by 19% to [about] 165 Bcf and lower the five-year average storage overhang 28% to 58 Bcf.”

The ascent of U.S. gas-directed drilling rig activity grew slightly steeper during the week ending Aug. 12, according to the Baker Hughes Rotary Rig Count. Following an increase of 12 units in the preceding week, 13 more were activated last week, bringing the total to 896, Baker Hughes said. One rig dropped out of the Gulf of Mexico search, but 14 were added onshore. Its latest tally was up 1% from a month ago but 10% less than the year-ago level.

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