As anticipated, the combination of generally mild weather forecasts, lower load over a weekend and the previous day’s weakness in energy futures caused prices to range from flat to less than a dime lower at a majority of points Friday. However, decreases of more than a dime were clustered in the West, where a heat wave earlier in the week continued to abate.

El Paso-San Juan saw the biggest drop by far of about half a dollar. A marketer explained that Transwestern maintenance at San Juan Lateral stations starts Monday, lowering the pipeline’s basin capacity by about 435,000 MMBtu/d through Thursday (see Transportation Notes). Thus, shippers of San Juan gas had to put major volumes into El Paso that they normally might have moved on Transwestern instead, she said.

The marketer then said a “little crisis” had just come up and she had to end the call abruptly. Later she said a large portion of her Transwestern-West Texas nominations had gotten caught up in allocations that the pipeline was making for Monday when maintenance will cut the WT-2 Station capacity from 500,000 MMBtu/d to zero (see Transportation Notes). She noted that the Southern California border had fallen nearly a quarter, but no one was expecting SoCalGas to issue an OFO. She also commented that the intrastate Texas market was still seeing little of either heating or cooling demand for gas.

Other indicators of western price weakness included Kern River saying linepack was high in all segments again Friday, and Westcoast maintaining a longstanding imbalance tolerance range of zero pack and 20% draft.

Florida Gas Transmission’s Zone 3 recorded one of Friday’s rare small upticks as the pipeline continued to warn Friday of a potential Overage Alert Day notice to keep its linepack from falling too low.

A Calgary-based producer echoed similar views of others in saying it was a largely “uninteresting” market Friday. However, he did report noticing an increase in intraday nominations for power generation load in the Chicago area since Thursday afternoon, which he assumed was related to regional nuclear plant outages since Chicagoland temperatures are on the cool side. He repeated another source’s comment Thursday that a cold front moving into the Midwest was not expected to result in significant heating demand increases. Weather around Calgary is “wildly fluctuating,” he added, being mild with highs in the 60s and 70s F. Friday and Saturday, but with snow expected Sunday.

“Prices are kind of high, and who knows why?” a Gulf Coast marketer rhymed. It was reminiscent of poet Ogden Nash’s “The Lord in his wisdom made the fly, and then forgot to tell us why.” It was that kind of a Friday. People keep pointing to the recent strength of oil and gasoline futures, but they are way overvalued as gas is, the marketer added.

A marketer in the Midwest was thinking similarly, telling NGI, “Aside from moaning and groaning about high prices, we’re seeing a quiet market.”

A utility buyer said a weekend cold front would just lower temperatures from mild to cool in most of the Northeast, “so it won’t generate any real heating load.” (But The Weather Channel said lows could get below freezing in northern New York and New England Saturday.) “Everywhere we’re reading about how gas prices will keep going up this summer. I don’t see why people keep buying gas at these high prices, because I can’t tell where the demand is coming from.”

Citigroup analyst Kyle Cooper said his initial estimate for the next storage report looks for an injection of nearly 80 Bcf. Noting that the most recent report of a 72 Bcf build was near the upper end of his expected range, Cooper said it “continues to reinforce our view of a bearish temperature-adjusted supply/demand balance and continues to place storage levels on track to easily surpass 3,000 Bcf by the end of October with levels above 3,100 Bcf considered very likely.

“In fact, if weekly storage changes maintain their recent relationship to the historical regression, inventories would actually approach 3,300 Bcf, under normal weather. However, temperatures are expected to be warmer than normal [this summer] and this combined with a continued strong economy and a relentless petroleum market will likely keep inventories under 3,200 Bcf. However, that will still be one of the highest end-of-October levels on record.”

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