Following a strong launch of the May aftermarket on Monday, things had settled down a lot Tuesday. Price movement was mixed but leaned heavily toward the downside. Growing cooling load across the southern half of the U.S. was starting to flag slightly in some sections, proving to be insufficient at this point to sustain price firmness, while mild weather meant very little weather-based load at all in northern market areas.
Most points were close to flat in ranging from about 15 cents lower to about 15 cents higher. However, a few Rockies points saw larger losses that ran as high as about 40 cents.
Cash quotes had a little bit of prior-day futures support from the June contract's 3.2-cent gain Monday. But that guidance has turned negative for Wednesday because the contract fell 14.5 cents Tuesday.
A Houston-based marketer noted that the Chicago citygate index for May stood out in the Midwest for its gain of more than 35 cents while indexes at other points in the region ranged from a nickel higher to a nickel lower. Increased buying for storage injections was responsible for the Chicago strength, he said, chiefly because Nicor customers aren't allowed to start injections into the LDC's storage facility until May 1. That strength seems to be carrying over to some degree into the daily market because Chicago was up more than a nickel Tuesday while most of the market was softer.
A similar factor should be in play for June indexes on Northern Natural Gas. The pipeline confirmed that it will delay the start of shipper storage injections until June 1.
The marketer said he thinks a lot of people go into a shoulder month like May unsure of what their needs, including storage, will be if something unusual like very hot weather comes along, but then after the month gets going they supplement their supplies in the spot market as necessary. For that reason he doesn't expect the market to see any major price fall-offs this month, adding that storage buying should remain strong and help keep a floor under the cash market.
A utility buyer in the Lower Midwest reported that local temperatures had dropped nearly 20 degrees from Monday to Tuesday, but her company was realizing no increase in heating load. "In fact, we're still selling lots of gas to power generators to run air conditioners," she said.
There were pretty decent power generation loads in Florida due to the heat, said a utility buyer in the state. However, he said he was surprised that Florida Gas Transmission (FGT) prices didn't go up because of an Overage Alert Day issued by the pipeline (see Transportation Notes). Florida Gas Zone 2 fell a little less than a dime while Zone 3 and the Florida citygate were flat.
Florida gas buyers may have a price break in the making now that Southern Natural Gas has placed the first phase of its Cypress Pipeline into service (see related story). The project initially will provide an incremental 220 MMcf/d of takeaway capacity from the Elba Island LNG terminal and extends Southern's system into northern Florida to an interconnect with FGT near Jacksonville. That will provide not only extra supplies in the Sunshine State but will diversify the sources.
A utility buyer in the South said he didn't make any baseload purchases for May because the company has "plenty of summer term" gas coming on-line. Area weather was "very nice" as May began, "so we'll just watch our storage injections" and buy daily gas as necessary, he said.
The National Weather Service predicts above-normal temperatures during the May 7-11 workweek throughout the Northeast, Midwest, Upper Plains, Midcontinent and nearly all of the South north of a strip along the Gulf Coast. It looks for below-normal readings only in peninsular Florida and the Pacific Northwest (all of Washington, Oregon and Idaho along with western Montana and the northern edges of Nevada and California).
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