Physical gas for weekend and Monday delivery gained ground in Friday trading as steady Monday power pricing, along with increasing energy demand over the weekend, prompted higher eastern quotes.
Soft Midwest pricing was easily buoyed by gains in Appalachia, Texas, Louisiana, the Rockies and California. TheNGI National Spot Gas Average added 4 cents to $2.91.
Futures trading was something of a snoozer, with total range on the June contract less than 7 cents. At the close June had added 3.7 cents to $3.276 and July was up 3.3 cents to $3.353. June crude oil gained 36 cents to $49.33/bbl.
The Marcellus proved to be the big gainer on the day as Monday power loads were forecast over Friday's. PJM Interconnection forecast that Friday's peak load of 34,368 MW would rise to 35,667 MW Monday. The New York ISO predicted that Friday peak load of 17,704 MW would climb to 18,088 MW by Monday.
Gas on Dominion South rose 22 cents to $2.63 and gas on Tennessee Zone 4 Marcellus added 23 cents to $2.56. Deliveries to Transco-Leidy Line gained 21 cents to $2.62.
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Monday on-peak power prices came in steady. Intercontinental Exchange reported on-peak Monday power at the New York ISO Zone G (eastern New York) delivery point rose $1.25 to $34.75/MWh and Monday peak power at the PJM West terminal slid 52 cents to $36.29/MWh.
Analysts see growing Permian volumes pressuring the basis and perhaps ultimately resulting in shut-ins. Tony Scott of BTU Analytics said, "April cash prices averaged $0.30 below Henry Hub for Permian and Oklahoma producers while Rockies producers have averaged $0.37 below Henry Hub pricing this month, trading at parity with their Appalachia peers battling for Midwest markets on REX pipeline. Despite the weakness in pricing, producers do not yet appear concerned.
"There's not another molecule of demand at the other end of the pipelines out of the Permian," Scott told NGI. "You've got strong hydro runoff in the West, record solar and wind numbers and we are not in the heart of the summer yet. Production is still ramping up, and we may see some tapering in the basis in June, July and August, but as we go back into the shoulder season next year the impacts likely get worse."
Futures opened a penny higher at $3.25 as traders were awaiting higher prices to initiate short positions.
Overnight weather models showed a cool East and warming West. "The current 6-10 day period forecast is cooler than yesterday's forecast across portions of the southern U.S. and East," said WSI Corp. in its Friday morning report to clients. "The Rockies and north-central U.S. are a little warmer. CONUS GWHDDs are up 2.2 to 34.9. PWCDDs are 8.8.
"The details of a storm system over the East late in the period can cause the forecast to deviate. The East and West Coast have cooler risks, but the Rockies and central U.S. have some warmer potential by the end of the period."
WSI forecasted that Monday's high in Boston would reach 55 degrees, 7 degrees below normal, and Chicago was expected to see a max of 61, 5 degrees below normal.
Traders are favoring the short side of the market but for now are on the sidelines. "The ability of the market to absorb a seemingly bearish storage figure in routine fashion suggests some further price consolidation, mainly within this week's trading range that could well persist through the first half of this month," said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning report to clients.
"But while we feel that a 300 Bcf storage surplus is more appropriate to nearby futures in the $3.05 area rather than $3.25 region, we will await a price advance prior to suggesting new short positions.
"The trade is likely to be a range-bound affair across most of next month until the kickoff to the cooling season when the weather factor will return as primary driver of nearby futures prices. We are still viewing the mid-week expiration of the May contract as a bearish portent given its increased discount of almost 13 cents relative to June values. The expanded June price premiums combined with the supply overhang could prove sufficient to entice commercial concerns further into the short side, especially as a hedge against future production amidst the unrelenting upswing in the oil and gas rig counts that should be furthered today."