Some traders were getting that roller-coaster feeling when prices fell sharply across the board Thursday, only a day after most of the market resumed an uphill trek that had been interrupted by Tuesday’s general flatness. The feeling was enhanced by screen hints that a rebound might be due Friday.

A few points, primarily San Juan/Rockies ones, were able to hold losses to 15 cents or less. But for most of the cash market, declines ranged from about 20 cents to 45 cents or so.

The Energy Information Administration said a record 114 Bcf got stashed away in storage last week, a volume that was within the range of prior expectations but generally considered bearish. Yet following an initial negative reaction, Nymex traders regrouped to send the June gas contract along to an eventual 14.6-cent gain on the day. Strong rebounds in the crude oil and heating oil pits were attributed to short-covering following Wednesday’s declines based on reports of rising inventories.

The futures strength made a couple of traders hesitant to make a call on Friday’s price direction, although their opinions tended to lean toward a modest rally. Offsetting the Nymex’s positive guidance, one said, were a continuing shortfall in fundamental weather support and the load drop that is typical of weekend periods.

Except for continued triple-digit daytime temperatures in the desert Southwest and highs exeeding 90 degrees in parts of the Pacific Northwest, most of the West remained in cooldown mode Thursday. And while much of the South and lower to middle East Coast can expect some serious heat next week, a stalled rain-bearing front is keeping the region from developing its normal air conditioning load potential for now.

However, a Northeast utility buyer said the region will get a small break from what has been a considerably cooler than normal spring so far. Temperatures are supposed to get into the low 80s Friday, she reported, but cautioned that “it’s not really air conditioning weather around here.” Besides, the thermometer is due to dip back into the 70s for Saturday’s highs, the buyer said.

A Northern Natural Gas explosion that destroyed a compressor station building in West Texas early Thursday (see related story) was thought to have contributed to the screen’s eventual run-up, but had no impact on the physical market. Gas was re-routed around the site and no deliveries were interrupted, a pipeline spokesperson said.

Although PG&E lifted Thursday’s high-linepack OFO after a one-day run, moderating heat in inland California prompted SoCalGas to declare an Overnominations Day and reduce all nominations in the Intraday 1 cycle Thursday. Shippers were told to stay within 110% of expected usage, a SoCal spokeswoman said. The OD also will be in effect for the Timely cycle Friday, she added.

The intraday introduction of SoCal’s OFO-like action “really messed things up and had people dumping gas late” in the Southwest production area, according to a marketer quoting Waha numbers falling from the low $5.90s early to the high $5.70s near deadline. Prices in Transwestern’s East of Thoreau segment also got hammered by the OD, she said. The marketer noted that her border-SoCal deal at $5.20 not only was more than 70 cents under Waha levels but also exceeded San Juan numbers by only a dime.

In discussing the latest storage report, Citigroup analyst Kyle Cooper said, “It certainly appears that the market is functioning quite well with $6+ gas, adding supply and subtracting demand as needed. Clearly, it remains a long summer and many events may still occur. However, barring extreme temperatures or hurricane-related supply disruptions, storage injections should continue at rather robust levels for the next few weeks. Injection response once significant heat arrives still remains to be seen. However, we do believe much of the incremental electricity generation will first come from petroleum[-fired] units and that large injections will occure for much longer than market expectations. We do expect relatively low injections in late July and early August, as nearly all generation units will be required to meet peak cooling demand.

“There clearly remain way too many market participants who believe higher prices encourage demand and reduce supply. We do not concur. This market is trading on fear, hysteria and speculation. Mother Nature may very well save the speculators in the near term, but these price levels with these injections are not sustainable. It will require extremely hot weather along with supply disruptions to maintain these price levels.”

Don’t look for that heat anytime soon in the eastern two-thirds of the nation, according to New York City-based Weather 2000. It noted in a Thursday advisory that the West Coast is easing back from hot weather as a ridge shifts inland, but there’s still no significant heat for most of central and eastern U.S. “Following an early-June warm spell, where ridge-induced subsidence, ample sunshine and some down-sloping are allowing the Pacific Coast temps to soar (Portland, Oregon hit 91 yesterday [Wednesday]), the focus of the heat should shift further inland. Some disturbances, troughs and Pacific air-mass influx will cool off coastal hubs after a very toasty first week of the month (and even scale back the very sultry Southwest)…

“Even Texas and the western Gulf, which have been moderated of late from some storminess, will see a return of slightly above normal afternoon temperatures. But remember, Oklahoma City, Little Rock, New Orleans, and especially Dallas and Houston are normally supposed to be reaching 90 degrees this time of year, so this is by no means a major heat wave.

“For the rest of the nation across the Northern Plains, Mississippi Valley, Great Lakes, Ohio Valley, Southeast, Mid-Atlantic and New England, the muted temperatures persist. Incredibly, New York never reached 80 degrees once [in] all of May, all of June thus far, and may still go another week or more. And this pattern extends all the way out to the Midwest where Chicago hasn’t even seen 70 degrees this month yet, and only hit 80 once in May on the 9th. Swinging from record cool to seasonable weather will undoubtedly raise some eyebrows. After a high of only 57 degrees yesterday (and 11 heating degrees days), when New Yorkers experience some 70s [Friday], there’ll be the psychological perception of a heat wave. If you’re driving down the highway at only 25 mph, and then double your speed to 50 mph, you might feel like you’re racing, but you’re still well below the speed limit. This is part of the problem (besides just plain anxiousness) of why other forecasters have been clamoring for heat waves: a 15-degree swing may occur, but often the temps are merely going from 20 degrees below normal to 5 degrees below normal.”

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