Any traders who decided that since April proved to be a goodmonth for long supply positions, they should continue the strategyfor May may be regretting that decision now. Though there is stillample time for price recovery-and at least one major aggregatorremains very bullish about the May swing market-the earlyaftermarket was headed south to the tune of about a dime or morebelow indexes in weekend deals done Friday.

Most sources pointed at the June futures drop of nearly a dimeas the cause of the cash softness, but “there was just no marketdemand,” one noted. In addition, a couple of traders agreed thatsome extra supplies were showing up that didn’t appear to have beenavailable previously. One in Houston thought some people had heldback gas during bidweek in expectations of meeting incrementaldemand that failed to materialize.

It was inevitable that some price retrenchment would set inafter the April day market was dominated by upticks, said theaggregator’s head of eastern trading Friday, but it’s difficult toanticipate that kind of reversal when all indicators say the marketoutlook is all toward the upside. However, “that should be thefirst clue that something is wrong when everybody is leaning in onedirection,” he added.

Despite the weekend price softness, there’s good reason toexpect May swing gas to recover to index levels or above, theaggregator said. Recent AGA reports indicate a large bite has beentaken out of the year-on-year storage surplus, and because manyutilities are not yet into their regular injection schedules, heexpects incremental injections to be rising during May. Also, therewill be substantial electric utility buying with just normaltemperatures, and there will be much more if the South’s airconditioning load is high, as predicted for first week of May, hesaid.

How hard is it to make a bidweek strategy call on whether totake a long or short supply stance? Sometimes it’s hit or miss, thetrading chief said, “but we were positioned well in both situations[April and May].” His company expected strong April demand becauseof non-gas power plant outages and cooler than normal weather innorthern and western markets. “But we didn’t expect well abovenormal air conditioning load in the South, which made us ‘righter’than we thought.”

Not only was Friday’s swing trend lower, but some points startedout down and proceeded much further down from there. One sourcequoted early Sumas deals in the high $1.80s, almost a dime underhis baseload numbers, then made his last two purchases of the dayat $1.80 and $1.75. And “nobody wanted San Juan [gas] today,” saida marketer who made his first Blanco pool deal at $1.90 only toclose out trading with a $1.70 purchase. He thought the threat ofan Overnominations Day OFO on the SoCal Gas system (none wasissued) scared off utility buyers in California.

Most May bidweek business had been completed by Friday, but thescreen weakness was affecting tail-end deals done that day. Forexample, Malin traded on either side of $2.10 for much of the week,but a marketer who picked up his last package for $2.05 lateThursday afternoon said Friday he wished he had waited becauseprices fell even further after that. Sure enough, another sourcereported a Malin purchase at $2.02 Friday.

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