Although the screen was successful in a feeble attempt at rallying during regular-session activity, cash prices continued to fall Thursday as traders contemplated the dual market depressants of hefty volumes already socked away into storage less than midway through injection season along with temperatures that, while on the warm side, remain subpar for this time of year.

Much like on Wednesday, a majority of points measured their losses as between a dime and 20 cents. And again, the Rockies and border-SoCalGas tended to see larger downturns than most of the market. However, the PG&E citygate ran against the general market grain with a rise of about a dime.

Thursday marked the official start of the summer season, but outside of inland California and the desert Southwest, really hot weather is still in short supply. Much of the South failed to get even into the 90s for daytime high temperatures, and the upper Northeast was experiencing a stormy cold front that left thermometers about 10 degrees lower in its wake, according to a forecasting service.

“We actually like this bearishness,” said a Gulf Coast source. “You can still make decent margins by trading smartly.” However, he saw at least some chance of a small price rebound today after the July futures contract built on its gain of less than 2 cents during the day by rising to the low $3.80s in late-afternoon Access activity. Henry Hub has been trading about a dime back of the screen lately, the source said, and was running true to form in early weekend Hub deals at $3.71, which would represent an uptick of about 2 cents from Thursday.

A western trader agreed with the possibility of flat to slightly higher eastern prices for the weekend, but dismissed any chance of the same thing happening in his market territory. California’s power grid is handling this week’s heat wave with no problems, he said, and otherwise western fundamentals are just too weak to support a rebound. Although PG&E was projecting linepack at its minimum target level today, the weekend forecast is for linepack rising to the maximum target on Sunday, he observed.

The Midwest market area was in a long supply position with a lack of significant weather, one marketer noted. Two nuclear plants are down in the area (Kewaunee and Palisades), but with little power generation demand due to mild temperatures, their absence had little impact on softer gas prices, he added.

Tropical Storm Barbara was strengthening Thursday far off the west coast of Mexico, but no activity continued to be the norm in the Atlantic basin.

California border-SoCalGas basis for July was getting “crushed,” two traders agreed. One said it plunged from plus $2.80 to plus $2.20 Thursday, attributing the cause to mild weather forecasts and plentiful storage. The other reported basis going even lower “to a little less than two bucks.” Barring any major rebound, such basis would result in bidweek border pricing in the vicinity of $6 or less, which would be a drastic comedown from the June index of $11.70.

The outlook for using first-of-month gas price indexes to help determine FERC-mandated power price limits in California was cloudy for several sources. NGI asked them what it would mean for gas-fired peaking units, who typically would be called into service for only parts of the month when the weather is hottest and gas prices presumably might be spiking, if the price of their fuel on any given day heavily outweighed the index. “They might lose money on their electric output, or might not even be able to get gas at all” during a true power emergency, said one marketer. However, he quickly added that there are too many variables and unknowns in the process to say anything with certainty at this point about how it will work.

Another California trader saw the market mitigation attempt by FERC as “a politically motivated attempt to fix a market problem. Furthermore, it unfairly rewards low heat rate generators. It will be interesting to see if generators look to be heavy buyers of fixed-price baseload gas in an effort to pressure the bidweek index higher.”

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