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Market Mostly Up a Bit Again, But Dips Make It Mixed

Prices finally interrupted the up-down-up seesaw changes that had dominated Monday-Wednesday trading by continuing to go in the same direction for the most part Thursday for the second day in a row. But they were seeing more softening than the day before, particularly at Midcontinent/Midwest locations.

A large number of points were flat, while gains ran as high as nearly a dime. Losses were similarly modest in ranging from a couple of cents to a little more than a nickel.

Because of the monthly transition to May on Sunday, Thursday's trading included flows for Saturday in addition to Friday. The inclusion of a weekend day may have contributed a bit to the growth in softer numbers. Friday's deals will be for Sunday-Monday flows.

The report of a 31 Bcf storage injection during the week ending April 22 by the Energy Information Administration fell short of consensus estimates in the upper 30s Bcf. The report got a bullish response from Nymex traders, who sent June futures 16.3 cents higher in their first day as the prompt-month contract (see related story).

A minor factor in the low build number may be Questar's Clay Basin storage facility apparently having not resumed injecting yet a week after ending a two-week outage for annual withdrawal testing (see Daily GPI, March 11), according to a Rockies producer. In fact, as of Tuesday Clay Basin had lower inventory than when the outage started and ended, he added.

Questar had said Clay Basin would have total available injection capacity of 375,000 Dth/d when the testing ended April 21 (see Daily GPI, April 20). But a spokesman said Thursday some injections were being taken, but withdrawals were outweighing them, so that's why it may have appeared that "net" injections weren't happening yet.

Spring weather has been pretty moderate in the Rockies overall, the producer said, but with freezing lows returning this weekend it may get some heating load back. That could be a problem for Kern River after it indicated having low linepack for the last two days, he said.

Without issuing an OFO, PG&E projected linepack on its California Gas Transmission system rising above its maximum target level Saturday and Sunday. Meanwhile, Kern River reported linepack remaining slightly below its desired minimum for a second day Thursday. And in a reminder that winter-like conditions can keep showing up more than a month after the official end of the season, Kern River also noted that several parts of the general Rocky Mountain region as far west as Salt Lake City, UT, will have lows slipping to around freezing or below on Saturday.

Temperatures were expected to rise in the South Friday, but east of the Mississippi highs would still fail to reach 80 at most locations except in Florida, largely due to the residual effect of a series of severe thunderstorms that had reached most of the East Coast Thursday, The Weather Channel said.

A moderate cooling trend that would be the strongest in upper New England was expected to continue in most of the Northeast, while the Midwest was anticipating significantly milder temperatures again Friday. Chicago's predicted increase from a low just above 40 and a high in the upper 40s Thursday to the mid 50s and mid 60s, respectively, on Friday, according to Weather Central, undoubtedly played a role in the citygate falling a little more than a nickel.

Other than the freezing to subfreezing lows coming up in the Rockies and continuing in parts of Canada, the West will tend to range from mild to hot in areas of the desert Southwest to cool in California to chilly in the Pacific Northwest.

Industry analysts have been noting this week that several nuclear plants that have been undergoing maintenance or refueling outages in recent weeks are starting to return to service or will be doing so during May, which is likely to cut into gas demand for power generation. However, the severe weather (including tornadoes) that devastated parts of the Southeast Wednesday caused automatic shutdowns that afternoon of all three units at Tennessee Valley Authority's (TVA) Browns Ferry Nuclear Plant. TVA said Units 2 and 3 at Browns Ferry had achieved "cold shutdown" early Thursday morning, which means reactor coolant system temperature had been cooled to 212 degrees or below. Unit 1 is being cooled, it added.

TVA declared a notification of unusual event -- the lowest of four levels of nuclear plant emergency classifications defined by the Nuclear Regulatory Commission -- following the shutdowns Wednesday when the normal and alternate power supplies for essential equipment were unavailable for more than 15 minutes. The public power agency said that as of Thursday morning 49 distributors of TVA power were reporting storm-related outages with an estimated 322,000 consumers being without power, which likely offset much of the loss of nuclear generator capacity.

Transco's Zone 6-New York pool was up about 2-3 cents again, but IntercontinentalExchange (ICE) said volumes on its platform at the Northeast market-area point had shrunk by nearly half from 199,400 MMBtu Wednesday to 110,600 MMBtu Thursday. On the other coast, ICE found its PG&E citygate trading activity soaring from 895,900 MMBtu to 1,012,500 MMBtu, although prices were essentially flat.

Because of the continuing large additions to supply ("we're finding a lot of gas," primarily due to the shale plays), a Midcontinent producer expressed puzzlement about futures going up so strongly. Sure, people think the EIA report was chiefly responsible, he said, but he has been having some doubts about its accuracy, particularly with generally moderate weather in the last week. So if an unusually small amount is getting injected, "where is the gas going?" he asked.

The producer wondered if rounding errors in the storage numbers might be a factor. Also, intrastate pipes and independent storage operators aren't required to submit data to the EIA, he pointed out, which creates the likelihood of actual injections being under reported during the summer.

He reported being unable to find any Midcontinent utilities buying gas in the last day or so, saying he was told they can buy power more cheaply than generating it themselves. And that lack of demand probably will get more pronounced when abundant western hydropower supplies begin coming on strongly in the next month or two, and as nuclear plants continue returning from spring downtime.

Cash numbers in his region were flat to a little higher in early deals, the producer said, but tended to weaken more toward flat to a couple of pennies lower near the end. He said he was able to find cheaper gas by waiting until later in the trading session. Panhandle Eastern and OGT tend to be the lowest-priced Midcontinent pipes for right now, he said.

Predictably, May bidweek trading was slacking off a lot on the day after the futures settlement, ICE said. Likely because of the substantial futures uptick, prices were seeing sizeable gains, it said, with an example being the MichCon citygate averaging about a dime higher around $4.71 Thursday. ICE also reported Cheyenne Hub in the Rockies rising from $4.04 to about $4.15, and a gain of about 13 cents to the $4.58 area at the PG&E citygate.

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