The increasing lack of weather-based demand weighed even more heavily on the cash market Friday, with prices falling at a large majority of points. And unlike the single-digit changes that had prevailed through Thursday last week, most of Friday's losses exceeded a dime. The previous day's futures drop of 12.3 cents was an additional negative influence on cash quotes.
Only gains of 2-3 cents by OGT and Westcoast Station 2, along with flat quotes at Sumas, avoided downturns ranging from about a nickel to nearly a quarter.
Negative screen guidance will continue for Monday's cash market as the May futures contract fell another 11.2 cents Friday in the initial day of its three-day settlement process (see related story).
A week that began with a cool East and warm West had flip-flopped by Friday after the warm-weather system completed its transition eastward across the continent. Neither condition was conducive to firmness in weekend prices as the eastern warmth (mostly in the South) only produced modest amounts of gas-fired power generation load, while the return of cooler temperatures in the West was insufficient to raise heating load by any substantive amount.
Virtually all of the remaining substantive cold weather had receded to Western Canada and the northwestern quadrant of the U.S. at the end of last week, and while it helped limit softness Friday at points related to the Pacific Northwest market, western heating load was still fairly minimal overall.
Also, western markets were singing the Excess Supply Blues once again. PG&E may have lifted a high-linepack OFO Friday, but SoCalGas substituted one for Saturday (see Transportation Notes). In addition, both Kern River and Westcoast continued to report high linepack throughout their systems.
A Gulf Coast producer reported seeing little demand for the weekend, saying it was the same old story: almost nothing in gas load for either heating or cooling. And based on the forecasts, he was unable to detect any signs of strength in the cash market on the immediate horizon
The producer said he was doing May deals Friday at Tennessee Zone 0 basis of minus 14 cents, along with Texas Eastern-South Texas at index plus 2 cents and Tennessee 800 Line at index plus 0.25 cent. He said he had actually been more active in May trading in the previous two days than on Friday. A lot of customers were telling him they expect to finish May baseload business Monday, the producer added.
A Midcontinent producer reported a fixed-price May sale at $2.60 into Panhandle Eastern. Other deals were at index minus 1-2 cents for Midcontinent pipes in general, he said, but ANR Southwest was slightly strong at index minus 0.5 cent. He said he was finding "fairly good early demand" for May on CenterPoint and Panhandle Eastern.
Contrary to the perceptions of some industry analysts, the Midcontinent producer said he is seeing what "may be a sign" that production cutbacks are starting to show some results in potentially shoring up prices before late this year. Some producers from which he had previously been buying supplies "are starting to ask me" to sell some back, he said. Basically they don't want to sell their own gas at current prices, but will buy from others to meet contract commitments, he said.
The producer commented that if industrial end-users are not already hedging their future purchases, "they're making a mistake." He thinks they'll regret not doing so in a couple of years when what he regards as an inevitable gas market rebound occurs. Also, industrial hedging now may help the price rally occur sooner rather than later, he added.
Baker Hughes recorded a decline of 18 in the number of drilling rigs searching for gas in the U.S. during the week ending April 24. Three rigs were added in the Gulf of Mexico but 21 were subtracted onshore, Baker Hughes said (see related story).
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