Except for flat performances at Kingsgate and Texas Eastern M-2, weekend prices dropped at all points in Friday’s trading. Support from a strong screen Thursday and from very hot weather continuing across the South and in much of the West was unable to overcome the decline in power generation load in key northern market areas and the weekend’s typical loss in industrial demand.
Losses ranged from a couple of pennies to about 40 cents. They tended to be smallest at Pacific Northwest points (Sumas, Kingsgate and Stanfield) and in Western Canada and Northern California — areas still struggling with extremely high temperatures. A new Power Watch was declared through Monday for California, and the state appeared to be on track to see a new record for electric usage (see story in Power Market Today). Somewhat surprisingly, quotes for the Permian and San Juan Basins and the Southern California border were considerably weaker despite their facing similar heat problems.
On the other hand, the greatest softening occurred in the cooled off Northeast. Again somewhat surprisingly, Midwest citygate declines were relatively mild despite stormy weather having brought temperatures down to mild levels for midsummer in both regions.
A Gulf Coast producer said the Northeast market area appeared to be set for rain most of the weekend, a residual effect from the passage of Tropical Storm Beryl. There was still a fair amount of power generation load in the region, even after temperatures had come down at midweek, he said. The Northeast will get hotter again this week, but things won’t be quite as bad as the sizzling conditions under which the Northeast began last week, he added.
The Henry Hub to Transco Zone 6-New York City basis had weakened since early in the week, but was still wide enough to cover transport variable costs, the producer said. His company was having to work around several sizeable constraints on Tennessee in Louisiana and Texas, he said.
He reported not hearing anything yet about the August bidweek, but said there was no rush with all of this week to get trading done. August will be “an iffy time” for the market, when it will be comparing the rapid storage refill issue against the rising hurricane threat (August and September are often the most active months of the season).
A Southwest utility buyer confirmed that raging heat levels were unabated in his area, saying Friday’s high was due to exceed 110 degrees. “California and we are likely to see record [electric] demand either Friday or Monday,” he said, adding that a record was more likely Monday if the current forecast was borne out.
“Everything’s running,” including the gas-fired peaking units, the buyer said. “It’s one of those days you’d like to have a few more generating units available” to make sure reserve margins are adequate, he said. “We’ve had two to three weeks of much above [normal temperatures], so we could use a break.
He also wasn’t hearing any bidweek talk yet, but expected it to be a quick one. Trading likely will be heaviest Monday through Wednesday this week before thinning out a bit Thursday, he said. He doubted whether anybody would leave much if any August baseload to be traded on either side of the July 29-30 weekend.
Analysis of pipeline flows at 14 pricing points by Bentek Energy (https://intelligencepress.com/features/bentek/) shows that nominations for Friday presaged the weekend softness. Volumes fell at eight of the points, often by large amounts, such as the Florida citygate (down 183,000 MMBtu/d), Transco Station 65 (down 168,000 MMBtu/d), the Chicago citygate (down 199,000 MMBtu/d) and the PG&E citygate (down 170,000 MMBtu/d). One point was unchanged, and the other five went up by no more than 16,000 MMBtu/d.
The National Weather Service forecast for the last few days of the month is somewhat bearish. Its prediction for the July 26-30 period calls for above normal temperatures only in the Northeast and the eastern third of the Midwest. Most of the nation will be normal, the agency said; the exception is an area of below normal readings from Idaho, Montana and the Dakotas south through the Rockies into northeast Arizona and northern New Mexico.
Tropical storm watches and warnings were discontinued for all of New England after Beryl confounded earlier tracking projections by passing over Nantucket Island, MA early Friday. Nova Scotia was expected to start getting a direct hit from the storm by Friday evening. However, Beryl was already becoming extratropical around midday Friday, the National Hurricane Center said.
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