Cash basis at Dawn has been on the upward trend since the start of July, bringing the bal-summer 2017 strip with it. While it is difficult to say with absolute certainty, the lack of need for gas in the US Gulf right now, coupled with the constant uncertainty of Rover’s in-service date appears to be providing much of the upward influence across the Midwest, and in turn, the Dawn market. After dipping to a year-to-date low of negative 13 cents/MMBtu on July 7, Dawn basis has experienced relatively steady upward pressure, where it has now managed to average only 3 cents back over the last week after jumping up to positive 5 cents on August 3.
Power burn estimates were revised higher for Monday by approximately 3.4 Bcf to 38.7 Bcf, driven by intraday nomination cycle revisions in the Northeast, Southeast, and Midwest regions, as population-weighted average US temperatures reached 79 degrees Fahrenheit Monday. Slightly milder temperatures are expected into Tuesday, and steeper declines are forecast through the end of the week, bringing the potential to drive gas demand for power generation lower. Total US power burn is estimated at 36.5 Bcf Tuesday, down more than 2 Bcf from Monday. For the balance of the week, gas demand for power generation is expected to decline further, as milder than normal temperatures are expected to descend across much of the central and eastern sections of county. US population-weighted average temperatures are expected to drop to 72 F by the weekend from 78 F Tuesday, and power burn for the balance of the workweek from Wednesday to Friday is forecast to average just over 32 Bcf/d. Note: Nuclear data has been updated from Monday and is current through Tuesday.
The low demand that has been blanketing California and the Southwest for the past ten days has allowed for increased injection activity on SoCal’s system, pushing total inventories towards the maximum levels seen last summer. SoCal injection activity has averaged 280 MMcf/d since August 11, a 440 MMcf/d flip from the same time period last summer when SoCal pulled an average 70 MMcf/d out of storage. On August 19, SoCal injections hit 367 MMcf/d, the strongest injection activity since injections were suspended into Aliso Canyon in late 2015. Total inventories on SoCal’s system currently stand at 57.4 Bcf, just 2.6 Bcf below the same time last year and 5.5 Bcf below maximum levels from last summer. With the partial return of Aliso Canyon, total SoCal storage capacity will be 8.8 Bcf higher summer on summer. Aliso’s usage will be limited to only high demand days this winter as SoCal is only allowed to pull from Aliso after its three other storage fields are at full utilization.