The cash market returned to mixed price movement Thursday, but unlike the mixed quotes of Monday and Tuesday, there were more declining points than rising ones this time. Modest warming trends in the Midwest and Northeast (before the return of colder weather in both regions next week) were the chief factor in the majority softness.
The drop of industrial load associated with weekend deliveries also came into play to some extent, because due to April starting on Sunday, Thursday's trading was for both the Friday and Saturday gas days.
Most points were flat to down a little more than a quarter. Gains ranged from a little less than a nickel to about 30 cents and were largest in the Rockies, where most of the remaining heating load is currently in residence. Although SoCalGas kept its high-linepack OFO in place through Thursday, Kern River said its linepack had returned to normal after being high systemwide earlier in the week.
The Energy Information Administration was near the high end of prior expectations in estimating a 22 Bcf withdrawal from storage during the week ending March 23; consensus estimates had centered around a pull of about 15 Bcf. Though larger than expected, the withdrawal was cast in a bearish light because it paled in comparison with year-ago and five-year average numbers. May futures fell 6.3 cents in making their prompt-month debut, going against the grain of major strength in Nymex's other energy futures offerings. Crude oil for May delivery was up nearly $2 to a little more than $66/bbl as geopolitical tensions continued to fester between Iran and Great Britain.
It is widely expected that Thursday's report represents the last net withdrawal of the current season and storage inventories will begin to build in the next report.
A Southern utility buyer confirmed that his company was buying daily gas and April baseload for storage injections because "the forward curve told us to go ahead and start refilling storage already" (that is, each succeeding monthly futures contract is priced higher through the end of the year). He reported finding April supplies readily available on TGT. Also, his staff found that pricing was relatively weak at the Joliet (IL) Hub, so the utility was able to pick up some cheaper gas there and backhaul it. Recent high temperatures getting near the mid 80s have created some "borderline" air conditioning load for the utility, the buyer added.
With a couple of plant outages looming, a Florida utility buyer said he had to buy more April supplies than usual to fuel gas peaking generation units. It "got hectic" during bidweek because he was trying to do April and summer business at the same time, he said. He bought gas in all three Florida Gas Transmission production area zones, but mostly in South Texas (Zone 1). The buyer said FGT Zone 1 basis started at minus 30-31 cents but later weakened to minus 39 cents, dropping as the screen went higher Tuesday and Wednesday.
He remarked that "they must be running the air conditioners already in Texas," because he wanted to buy some end-of-month supplies there Thursday and said the price offers kept running higher as the morning proceeded.
An industrial end-user said he finished making April purchases last Friday. It appears that LNG deliveries continue to be plentiful at the Lake Charles, LA and Elba Island, GA terminals because supply offers were abundant on Trunkline and Southern, he said.
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