Following a week in which weather across Canada and much of the northern U.S. seemed more appropriate for winter than the still-young spring season -- keeping spot prices mostly flat or firmer -- just a few areas of significant heating load remained Monday. The upshot was falling prices at most points.
Friday's drop of 2.7 cents by May futures also made a minor contribution to the overall cash softness.
A few flat to nearly a dime higher prices, primarily in the Northeast and West, were exceptions to drops elsewhere that ranged from 2-3 cents to about 40 cents. Losses had only slightly outnumbered flat to rising numbers Friday (although the losses tended to involve larger price changes), but they commanded a clear majority of the market Monday.
Tuesday's cash market will again have negative screen guidance after prompt-month futures fell another 7.3 cents (see related story).
The Northeast experienced a brief warm-up period during the weekend after a wintry late-week storm had dumped copious amounts of snow on some parts of New England. But a few points in the region saw small rebounds as lows were expected to sink to just above freezing Tuesday in such major gas-consuming urban centers as Boston and New York City.
Cooling trends in most of the South from Texas, Louisiana and Arkansas eastward weren't likely to spur much furnace use, but instead were almost certain to result in falling power generation load as air conditioners get turned off. Meanwhile, the Midwest is gradually warming enough that heating load will be minimal for a while, and except for near-90 highs in parts of the desert Southwest, most of the West's forecast calls for chilly to mild conditions. However, subfreezing lows are still due in much of Canada.
Western market issues with excess supply going into the weekend had cleared up Monday. PG&E and Westcoast ended high-linepack OFOs, while El Paso and Kern River reported that their linepack levels were back to normal.
Despite the resolution of high linepack, El Paso's San Juan-Blanco pool fell nearly a dime, but its volumes on IntercontinentalExchange (ICE) soared from 453,000 MMBtu Friday to 645,400 MMBtu Monday, the online trading platform said. But quotes into Kern River recorded one of the day's biggest losses, and ICE activity declined from 89,200 MMBtu to 31,300 MMBtu.
The Northwest bulletin board indicated gradually falling temperatures through Wednesday at several locations in its service area.
Houston Ship Channel quotes fell nearly a nickel as recent highs around 80 will fall to the mid 70s Tuesday before going higher again. ICE said its Ship Channel volumes were down from 244,600 MMBtu Friday to 203,900 MMBtu Monday.
The National Weather Service's six- to 10-day forecast for the April 9-13 period calls for moderately above-normal temperatures in most of the eastern half of the U.S. Of course, by now the market has entered that time of year when anything less than much-above-normal or much-below-normal deviations will have little if any impact on spot gas prices. But by next month above-normal conditions will be more meaningful to power generation demand across the southern part of the nation.
Noting that the CIG-Henry Hub basis spread widened to about 65 cents Monday, a Rockies producer said not only has much of the region been unseasonably warm lately, but Questar "is throwing a lot of extra gas" into the market by requiring customer withdrawals Tuesday and Wednesday from Clay Basin storage prior to an annual testing shutdown of facility for nearly two weeks (see Daily GPI, March 11).
Denver, the area's largest market, set a date-specific record high in the low 80s Saturday, the producer continued. It's hard to tell because April snowfalls are not unusual in the Rockies, but it may not get really cold again until next fall, he added. Still, he expects some recovery in Rockies prices by the end of the week as the market adjusts to the initial impact of the Questar work, along with maintenance-related capacity restrictions on CIG and at its storage fields (where injections will be limited at various times during April and May starting Tuesday).
After seven straight weeks of decline, the number of drilling rigs searching for gas in the U.S. continues to move higher again in a big way. The Baker Hughes Rotary Rig Count followed up its previous report of a five-rig gain by saying 11 more had been activated for the week ending April 1. A single departure from the Gulf of Mexico was offset heavily by the onshore addition of 12 rigs. The latest Baker Hughes tally is down 1% from a month ago and 6% lower than the year-ago level.
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