Physical natural gas for delivery Tuesday showed little change in Monday trading as outage-driven gains in the Northeast coupled with strength in West Texas were able to balance weak pricing in Appalachia and the Midcontinent. The NGI National Spot Gas Average was up 2 cents to $3.08.

Futures prices retreated as Friday’s lofty perch proved too difficult to hold, and traders now find themselves staring down the barrel of increased storage builds going forward. At the close June had slumped 7.5 cents to $3.349 and July had fallen 6.9 cents to $3.429. June crude oil jumped $1.01 to $48.85/bbl.

Prices at New England points surged as constraints on Algonquin Pipeline came into play. Gas at the Algonquin Citygate vaulted 52 cents to $3.68 and deliveries to Iroquois Waddington fell 2 cents to $3.31. Gas on Tennessee Zone 6 200 L rose 28 cents to $3.39.

“Algonquin will begin implementing capacity reductions at Burrillville [compressor station] starting [Tuesday] and lasting about two weeks,” said industry consultant Genscape in a morning report. “Starting May 16, capacity at Burrillville will be reduced to a maximum of 365 MMcf/d. Seven day flows through Burrillville have averaged 410 MMcf/d, with a single day max of 602 MMcf/d. The two week timeframe will likely be updated as the event approaches.

“This outage will occur at a very northern part of Algonquin, significantly reducing the re-route options in the event demand exceeds what can travel through the compressor,” said Genscape.

Gas bound for New York City on Transco Zone 6 fell 4 cents to $2.89 and gas on Tetco M-3 Delivery dropped a nickel to $2.85.

Next-day peak power prices were supportive. Intercontinental Exchange reported on peak power Tuesday at the ISO New England’s Massachusetts Hub rose $4.66 to $34.23/MWh, and on-peak power at the PJM West terminal added $3.56 to $36.95/MWh.

Other market centers fluctuated within a few pennies of unchanged. Gas at the Chicago Citygate eased 2 cents to $3.08 and deliveries to the Henry Hub were quoted 2 cents higher at $3.27. Gas on El Paso Permian rose a couple of pennies to $2.85 and Kern River changed hands flat at $2.89. Gas priced at the SoCal Border Average added 4 cents to $2.98.

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Futures opened about 6 cents lower Monday morning at $3.36 as traders factored in a lack of a discernible pattern to heating and cooling requirements and saw a market ripe for reducing producer price exposure.

Overnight weather models turned cooler for eastern energy markets.” The forecast comes in cooler versus Sunday across the eastern half despite a mid-period round of warmth,” said MDA Weather Services in its morning six- to 10-day outlook. “Some of the cool change stems from high pressure bringing temperatures down to normal in the Northeast at the onset of the period. As the high moves out and a cold front approaches from the West, temperatures return to above/much above normal levels mid-period before moderating again late.

“Meanwhile, cooler conditions are noted in the Midcontinent, but the forecast is not as cool as model guidance. The West is warm, with much aboves in California through mid-period and the Northwest late.”

Heating loads for the week are expected to be sharply below normal. The National Weather Service (NWS) predicts that for the week ending May 20 New England will experience 31 heating degree days (HDD), or 29 fewer than normal. The Mid-Atlantic will see 19 HDDs or 27 fewer than normal, and the greater Midwest from Ohio to Wisconsin is forecast to have just 10 HDDs, or 41 fewer than its normal seasonal tally.

Cooling loads are just the opposite. NWS forecasts that New England will experience 19 cooling degree days (CDD) or 18 more than normal. The Mid-Atlantic will see 27 CDDs, or 22 more than normal, and the greater Midwest from Ohio to Wisconsin is forecast to experience 32 CDDs, or 20 more than its seasonal norm.

Early expectations are for the week’s storage build to come in well below seasonal norms. In its Early View survey The Desk found an average 59 Bcf in a survey of 12 traders and analysts. Last year 71 Bcf was injected and the five-year average comes in at 87 Bcf. The range on the survey was 52 Bcf to 64 Bcf.

Risk managers see now as the time to strike to lay in producer hedges. “There is a lot of technical resistance at current levels; however, it may try and test new highs near $3.50,” said Mike DeVooght, president of DEVO Capital, in a weekly report to clients. “Supplies are more than adequate and demand is up ticking slightly because of firm electricity demand. That being said, we would use the current rally to add to hedges if necessary.

“On a trading basis, we have reached current levels of $3.40-3.50 to add producer hedges through year end and through the winter of 2018”