The Midcontinent and much of the West were able to record substantive gains on Monday, but most points in the East were less than a dime either up or down from flat. The source of the overall price strength remained about as elusive as it had in much of the past two weeks. The post-weekend restoration of industrial load was positive, but weather-based demand was still missing in action for the most part, and the previous Friday's 19.4-cent dip by June natural gas futures certainly didn't contribute any strength to the cash market.
A large majority of points were flat to about 45 cents higher. Most of the losses ranging from 2-3 cents to about a dime occurred at Gulf Coast locations.
A rebound of 4.1 cents Monday by June futures ensured mildly bullish prior-day screen guidance for the cash market Tuesday (see related story).
Heat may have been working as a price booster in the West. Not only were sections of the desert Southwest continuing to bake under highs in the low 100s, but forecasts of Rockies highs around 90 Tuesday meant that region would be distinctly hotter than Texas, where a weekend cold front was rolling back peak temperatures into the 80s Monday and Tuesday. Inland California highs, although declining from weekend levels around 100, also would contribute some air conditioning load by still hitting the 90 area Tuesday, according to Weather Central.
But except for some lingering 30s and 40s lows in southern Canada, it was once again hard to detect substantive weather support for prices in either the hot or cold area. The South had cooled off to some extent from last week, while cool to moderate temperatures continued to dominate in the Northeast and Midwest.
Several pipelines, including ANR and Southern, have posted bulletin board notices recently about the impending June 1 (official) start of hurricane season and what shippers should be prepared to do in coping with hurricane-related production outages in the Gulf of Mexico.
Almost as if it was being coordinated, AccuWeather.com said Monday it was "not out of the question" that a system of cooler air trapped over the eastern Gulf of Mexico could become the first named storm, Ana, of the season. However, the National Hurricane Center said an area of disturbed weather that had formed over eastern Cuba, the southeastern Bahamas and adjacent waters had less than a 30% chance of becoming a tropical cyclone during the next 48 hours.
A producer saw some potentially bullish implications from an impending shutdown of the Sea Robin Gas Plant for about two weeks (see Transportation Notes). Saying he understands that Sea Robin Pipeline normally moves about 1 Bcf/d while the plant is operating, the producer commented, "We could sure use some help on the supply side" from such a substantial subtraction of output.
Although her company does only a little business in the Midcontinent, a Gulf Coast trader said it didn't make much sense for prices there to make such large gains Monday, especially with moderate forecasts in the Midwest market area. Cash prices came off early before rallying later, "and then I stopped looking," she laughed. She expects Monday's gains by the energy futures complex to keep cash gas prices rising at most points Tuesday.
The trader said she was already seeing a little interest in June baseload business. It has been more from buyers than sellers, she said, which she thought was primarily due to the buyers looking ahead to the Memorial Day weekend and wanting to get done before then.
A Midwest marketer said his company's staff "was discussing it, but has no really good feel" on why Midcontinent prices were so strong Monday while Midwest weather forecasts were fairly pretty mild. It will be curious to see what happens when the summertime heat comes along, he said. "We might see some excitement then," but for now it's kind of a boring market, he said.
The decline slowed again during the week ending May 15 in the Baker Hughes survey of drilling rigs actively seeking natural gas, as the company said it found a net drop of only two rigs (http://intelligencepress.com/features/bakerhughes/). However, if it hadn't been for a gain of three rigs in the Gulf of Mexico, the downturn would have been greater as five rigs quit the onshore search. The latest count of 728 rigs looking for gas is 4% less than a month ago and down 51% from the year-earlier level, Baker Hughes said.
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