The continuing decline of heating load in North America, coupled with a lack of substantive cooling load to replace it, caught up with the cash market Thursday and caused moderate price drops at most points. Rockies points took the biggest hits by far, with Northwest-domestic and Opal recording dollar-plus plunges.
Several flat points, primarily in the Gulf Coast, along with a few small gains averted a clean sweep of softness. But the cash price downturn very well could spread across the board Friday after expiration-day trading of May futures took the contract down 18.1 cents. Also, the loss of industrial load over a weekend will be another negative factor in Friday's market.
The majority of price dips ranged from a couple of pennies to about $1.10. Outside of the Rockies they were generally moderate in being capped at around 20 cents.
A Bentek Energy analysis showed that Colorado gas demand Thursday was way down from Wednesday when a major snowfall was occurring. A Bentek staffer said it was probably safe to assume Rockies-area demand will drop even further Friday, and he noted that softer prices to both the east and west of the region meant export opportunities were low.
PG&E provided another clue about the lack of western demand. The giant dual utility said linepack would be OK Friday, but it was projected to rise above maximum target levels during the weekend.
Florida Gas Transmission's issuance of an Overage Alert Day due to hot weather in Florida (see Transportation Notes) produced Thursday's only gain with Florida Gas Zone 3 up about a nickel. The Florida citygate was flat.
Just to the north, however, was evidence of how little air conditioning demand has developed in the Deep South through late April. The Friday forecast for Atlanta called for a high in only the low 70s. However, that could be about to change, as The Weather Channel said some low 90s peak temperatures are possible in the Southeast by next Tuesday.
A Northeast marketer said he was "actually shocked" about how supportive the screen had been for cash prices through Wednesday, so it was no surprise at all when the May contract fell upon expiry. Cash quotes are starting to come off also with seasonal weather to "zap demand," he said. He noted that physical gas had some underlying support from people buying for storage purposes in an attempt to beat the hurricane season coming up, but he said there was "no [power] generation demand to speak of."
The marketer said his company wrapped up May trading Thursday, doing basis deals at the Algonquin citygate for plus 67 cents, at Texas Eastern M-3 for plus 59.5-60 cents, and at Transco Zone 6-New York City for plus 64 cents. Algonquin has seen a down-up-down basis pattern this week, he said, while basis for the considerably more liquid M-3 and Zone 6 stayed fairly even.
A marketer in the Upper Midwest said it was raining in her area Thursday, which to her was infinitely more preferable than the snow experienced earlier this month. She reported paying basis of plus 22 cents on both the MichCon and Consumers Energy systems, and said her company's May baseload prices were essentially flat from April.
That seemed reasonable, since the May futures expiry at $7.508 was only an even nickel less than April's settlement.
Having indexed all his purchases, an industrial end-user found it a "pretty uneventful bidweek. He noted that all Midcontinent deals carried premiums to index, mostly at index plus 1.5-2 cents. Liquefied natural gas supplies were plentiful and their prices were competitive with new production, he said.
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