After appearing to ignore bearish weather fundamentals in registering price gains at all or nearly all points for nearly a week and a half, the cash market had finally shown signs of cracking Wednesday with mostly small losses at a majority of points. The price dam broke Thursday as substantive double-digit losses occurred across the board.
In addition to the eventual recognition of little weather-based load, Thursday's cash downturn also was influenced by the 11.6-cent decline of June futures a day earlier.
Overall losses ranged from a little more than 20 cents to nearly 85 cents. But except for much-larger drops occurring in the Rockies/San Juan Basin markets, declines were remarkably consistent across all other geographic areas in being capped around 45 cents.
The futures market was again deficient in supporting next-day cash quotes, as the June contract fell another 4.1 cents Thursday after the Energy Information Administration reported a 95 Bcf storage addition for the week ending May 8. That was only at the lower end of consensus expectations in the mid to high 90s Bcf, but regarded as bearish in comparison with lower volumes than those of a year ago and the five-year average (see related story).
Mild to cool was the dominant forecast for Friday from the Northeast through the Midwest, Plains, Rockies and Pacific Northwest -- and that meant little to no furnace use in those areas. It was due to be a little chillier north of the Canadian border, but not by enough to make a significant difference in gas demand.
The Midcontinent was forecast to join the South in warming trends Friday, but the results would continue to be limited to the relatively moderate mid 80s or less for the most part -- far from the cooling load that can be expected starting about a month or so from now.
High temperatures around 100 or so will continue in parts of the desert Southwest, but other than some 90-area readings in interior California, that's about the extent of the West's weather-based load. Moderate conditions will reign Friday from the Rockies through the Pacific Northwest, and although some overnight lows near freezing were still due in parts of Western Canada, they would be largely offset by highs in the mid 50s.
It may have been sneaking up on some people, but the industry is just a little more than two weeks away from the official start of the 2009 Atlantic hurricane season, which will add another facet to market prospects.
Among the reasons for greater western softness was El Paso reporting high linepack throughout its system Thursday.
It's been "cool but comfortable lately," said a marketer in the Upper Midwest. But the main reason for his continuing bearish outlook on gas prices, he said, is that "the economy is still not going anywhere." He remains very pessimistic on any substantive recovery in financial markets occurring this year. The recent surge in energy efficiency moves and overall lack of industrial demand means things will get "dire before it [energy price recovery] gets done," he predicted.
Colder temperatures are due again in his area late in this coming weekend, the marketer said, but they may well be the last such conditions until next fall and aren't likely to get many furnaces turned on. It's more likely that windows will be closed and an extra blanket gets tossed on the bed, he added.
A utility buyer in the Lower Midwest said his company was already "pretty much into the summer doldrums," with pleasant weather translating into low gas throughput. It's "slow for us right now," and at this point there's no hot weather in sight that might make a difference, he said. In addition, there is a new coal-fired power plant coming on-line in the area during the next few weeks, which is likely to curtail some of his company's power generation load this summer, the buyer said.
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