Although some had expected a prior-day futures rise along with a cold North and a hot South to yield a continuation of rising prices Thursday, it was not to be. Declines were small in most cases and there were quite a few instances of flat to slightly higher numbers, but the cash market overall was softer going into the Good Friday/Easter holiday weekend.
The extra loss of industrial load over a holiday weekend apparently was an added bearish influence on losses ranging from 2-3 cents to a little more than 15 cents. Flat quotes were fairly common, and Transco Zone 5 along with Alberta's Empress and NOVA Inventory Transfer points were up from a couple of pennies to about a nickel. Most of the double-digit dips were shared by the Northeast, Midcontinent and Rockies.
The Energy Information Administration fell short of consensus expectations in the low 50s Bcf when it reported a 47 Bcf addition to storage in the week ending April 15. Although the volume exceeded the comparable five-year average of 34 Bcf, Nymex traders found it bullish as they pushed May futures 10.2 cents higher Thursday (see related story).
A rising trend in temperatures in the South appeared to have stalled at least temporarily in much of the region, with most of the increases occurring in its northwest corner where a cool front had moved through earlier in the week. A cooler forecast in the Northeast and static to slightly warmer conditions in the Midwest left both regions experiencing roughly normal weather for this time of year.
Thursday's restoration of normal injection capability at Questar's Clay Basin storage facility after a two-week testing shut-in failed to support Rockies prices. Quotes into Questar itself dropped about a dime. Forecasts of cooler temperatures Friday also were unable to avert Rockies softness.
It wasn't much, but tropical activity in the Atlantic Basin has begun ahead of the usual hurricane season start on June 1. The National Hurricane Center (NHC) said a low-pressure area about 450 miles north-northeast of San Juan, Puerto Rico Thursday afternoon was "producing poorly organized shower and thunderstorm activity." NHC accorded the system only a 10% chance of becoming a subtropical or tropical storm within the succeeding two days, and its northwestward to northward movement made it unlikely to reach even the East Coast, let alone the Gulf of Mexico.
Henry Hub quotes were flat, but its trading volume on IntercontinentalExchange (ICE) rose from 931,200 MMBtu Wednesday to 1,046,300 MMBtu Thursday. Meanwhile, the Chicago citygate fell a little more than a dime while its ICE activity plunged from 1,178,700 MMBtu to 820,400 MMBtu. Both the high and low for the Chicago area were expected to be in the range of 45-50 degrees Friday, said the Weather Central forecasting firm.
A Rockies producer said one factor in recent price firmness may be the Nuclear Regulatory Commission reporting that current plant outages have taken nuclear power output to near 4.5-year lows, indicating that gas is helping to make up the shortfall. There's still snow falling in parts of the Rockies, he said, but weather is relatively moderate in the region's major consumption center of Denver.
His company anticipates good results when it finally begins drilling in the Niobrara Shale, he continued, but on average it's taking producers about 206 days after filing to get permits from the Bureau of Land Management. Also, there's a shortage of available rigs due to some of them moving to the Bakken play, he added.
The producer said according to what he is hearing, Ruby Pipeline is still on track for a July startup. Normally that would benefit Rockies prices because of the added takeaway capacity, but he was concerned that the current abundance of western hydropower may tend to negate any such advantage for some time (see related story).
The gas buyer for a utility in the South said its service area had been on the cool side through midweek, but it could expect customers to be switching their thermostats from heating to cooling over the holiday weekend. The company has been a little limited on injecting into storage as much as desired because of April's cool spells, but generally "we're hitting our targets," he said.
A Midcontinent trader said he was shaking his head over Thursday's falling prices, having thought weather-based demand and a strong screen would keep them rising. The softness must have been due chiefly to the bearish influence of a long weekend, he said, and the moderately bullish storage report came too late to affect the cash market. Most of the declines occurred toward the end of trading, he added, lamenting that he could have bought gas at cheaper prices if he'd been patient and waited.
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