It wasn't very surprising that the limited amount of early-spring cooling load across the southern U.S. and rapidly vanishing heating demand in the upper Northeast, which had produced small gains at most points Wednesday, were unable to sustain that firmness Thursday. Losses occurred at a large majority of points, although price movement continued to be minor as few declines exceeded a dime.
Most of the market was down 2-3 cents to about 15 cents. Nearly all of the flat to about 20 cents higher quotes were in the Rockies; although forecasts for Denver were only moderately cooler, some subfreezing lows were expected in northern parts of the region, such as Casper, WY. And PG&E is ending a high-inventory OFO Friday (see Transportation Notes).
The report of a 46 Bcf storage injection during the week ending April 17 by the Energy Information Administration only modestly exceeded consensus expectations of 42-44 Bcf or so in media surveys, but it reaffirmed that the annual refill process is getting a strong start in only its first month -- and that translates to bearish sentiment. Nymex traders seconded that emotion by taking the prompt-month futures contract 12.3 cents lower Thursday (see related story).
Although the South will be gaining locations peaking into the 80s Friday, the overall weather outlook was bearish as most remaining cold conditions were due to vanish and the replacement warm weather was not at all severe.
At about 1 p.m. CDT Thursday The Weather Channel's "U.S. Current Temperatures" map was showing yellow to red colors (indicating mild to warm temperatures) throughout nearly all of the southern two-thirds of the nation and extending in the middle northward into Minnesota and North Dakota. The only blue (chilly to cold) areas were the Pacific Northwest through central Montana and inland sections of the Northeast from western Maine through western Pennsylvania.
Although PG&E is canceling a high-inventory OFO Friday, excess supply issues hadn't departed the West. Both Westcoast and Kern River reported high linepack throughout their systems Thursday.
Although such conditions have occurred mostly in the West in recent years, they were spreading to the Gulf Coast Thursday. Transco cautioned shippers about a potential Imbalance OFO, recalling past notices about experiencing high pressures and linepack "as a result of current operating conditions. High system utilization [and] pipeline maintenance...have resulted in reduced operating flexibility."
Snow hadn't entirely disappeared from the forecast, as TWC predicted that a low-pressure wave along a cold front will produce accumulating snow and rain across Idaho, Montana and northern Wyoming Friday. But the sparse population in that area will reflect an almost imperceptible blip on the heating load radar of gas demand.
A marketer said the Northeast would be warming up pretty quickly from Friday through the weekend, and he thinks the regional market is "going to see loads at their lowest levels in a long time." That, along with Thursday's bearish storage report and accompanying screen weakness, pretty much guarantee further softness in the cash market Friday, he said.
Unlike a Gulf Coast trader who reported brisk May demand Wednesday, the Northeast marketer said it was looking like a "pretty sloppy start" to bidweek Thursday, although he acknowledged that he hadn't actually initiated any May trading yet.
It will be up near 80 degrees in the Midwest Friday, a marketer said, but that means almost nothing in the way of cooling load yet in a region that has been experiencing cold weather until recently. He noted that loads among his company's manufacturing clients "are way down," and he expects to make very small baseload purchases for May in that area.
The marketer said there has been talk in recent years of potential price crashes in late summer or fall because of burgeoning storage inventories that weren't realized. But the economy wasn't in severe recession back then, so it may be a lot more likely this year, he said.
A utility buyer in the South said it was a "normal April," with his company adding and subtracting from storage at various times in the first part of the month. It had injected for six to seven days back then, he said, and then a couple of days of cold weather spurred it to withdraw about the same amount, taking the net addition to approximately zero.
The buyer said he had done baseload deals for May at index flat into Trunkline-West Louisiana.
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