It was no surprise when cash market weakness increased greatly Friday. Not only was there the previous day's futures drop of 31.6 cents as a depressant, but generally moderate weather forecasts in most areas and the weekend factor of declining industrial load played a part.
All of Friday's losses were in double digits as they ranged from about 15 cents to the half-dollar area. The Northeast recorded several of the top declines and Western Canada's were toward the low end, but generally they were distributed evenly across the various market areas.
Monday's cash trading can look for further negative futures guidance after the prompt-month contract finished Friday 2.6 cents lower (see related story).
Except for some cooler conditions returning to the Midwest and New England, moderate weather trends continued to dominate the overall outlook. Except for peak temperatures around 100 in parts of the desert Southwest such as Phoenix, highs in the southern third of the U.S. being limited to the mid 80s or lower proved unable to support gas prices. That was due in part to the continuing return to service of nuclear plants that had been down earlier in the spring for maintenance or refueling reasons.
PG&E was joined in a continuing high-inventory OFO by its neighbor to the south, SoCalGas, with one of its own for Saturday (see Transportation Notes). IntercontinentalExchange (ICE) reported Southern California border quotes down just shy of 35 cents while trading activity there on its platform fell from 662,500 MMBtu Thursday to 551,800 MMBtu Friday. A PG&E citygate price decline of slightly more than a quarter was accompanied by an ICE volume drop from 1,081,200 MMBtu to 981,300 MMBtu.
Other than Westcoast again reporting high linepack Friday, western supply issues appeared to have eased otherwise.
Pan EurAsian Enterprises saw an LNG cargo having arrived at the Elba Island facility and two more heading toward what it believed to be the Gulf Coast's Golden Pass facility as a refutation of the question about whether there was a shortage of LNG in the global market. "If the market was all that tight, would those cargoes be coming to the lowest netback market in the world?" the Pan EurAsian analysts asked.
Northern Natural Gas indicated the extent of the Upper Midwest's warming trend with a bulletin board posting projecting that compared with its normal system-weighted temperature of 55 degrees at this time of year, the average was expected to be 60 Sunday and 65 Monday.
Gas prices look pretty soft for a while, commented a Texas marketer. He didn't see any significant demand pick-up for at least another week or maybe longer, based on weather forecasts. He expected the lack of current-burn demand to spur further large storage injections in coming weeks.
Other than a few minor Tennessee maintenance constraints, all was quiet on the pipeline front as far as the marketer was concerned.
A Southern utility buyer said cool weather at night, with lows in the 50s, required him to keep buying "a little extra" spot gas -- partly for the minuscule heating load but mainly to keep up with the company's planned storage injections.
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