Softness was moderately predominant in a mixed pricing environment Monday. Forecasts of pleasant to cool conditions Tuesday in the Midwest, Northeast and eastern end of the South resulted in drops at a majority of eastern points, although most of the Midcontinent recorded substantive gains.
Meanwhile, the schizophrenic western market featured a little bit of everything: big advances, big declines and even some flat numbers in the Pacific Northwest. The Rockies, where Tuesday's weather was expected to be chilly but not especially cold, saw the major dips of up to about 95 cents. But highs expected to reach the 80s and 90s Tuesday in inland California, the desert Southwest and intrastate Texas resulted in gains of up to nearly 55 cents all the way from the PG&E citygate and Malin to Waha and the Permian Basin.
The price dips that characterized most of the eastern market were relatively light. A couple of points fell about 25-28 cents, but other decreases were mostly in the teens and capped at around 20 cents.
Although the Midcontinent realized increases at most points, that strength did not carry over into its primary market area of the Midwest, where the Chicago, MichCon and Consumers Energy citygates ranged from about a dime to 20 cents lower.
The return of industrial load from its usual weekend decline contributed a little bit of support to the cash market. Screen guidance from Friday was essentially negligible, when the June futures contract fell just under a penny. However, it will be decidedly negative for Tuesday's cash trading; June gas fell 15.9 cents Monday amid overall weakness by Nymex's energy futures complex.
Excess supplies that had been a factor to some extent in Friday's western markets were receding. A PG&E high-inventory OFO was in effect for Saturday only. El Paso said conditions had improved and canceled Monday its warning of a potential Strained Operating Condition declaration due to excessive linepack, although it urged shippers "to continue monitoring their supplies and to manage their takes to remain in balance." Kern River said linepack was high Monday in only one of its four segments (instead of two as on Friday) and was normal elsewhere.
Since the Carthage-Perryville Pipeline (CP Line) project of CenterPoint began full commercial operation on May 1, it has been backing out South Louisiana supplies, especially into Columbia Gulf, says a report by Bentek Energy (see related story). Since late April when a little more than 600,000 MMBtu/d of East Texas supply was moving from Carthage to the Perryville Hub in northeast Louisiana and an interconnect with Columbia Gulf there, volume has risen to more than 1 million MMBtu/d since May 1, Bentek said. This has caused Carthage basis relative to Columbia Gulf Mainline to be nearly halved from minus 49 cents to minus 28 cents, the consulting firm added.
A Midcontinent producer said despite the gains in his region, he was finding gas a tough sale anyway because of low Midwest demand and "no west-to-east spreads" that could be exploited. He attributed the seeming disparity in Midcontinent-Midwest price movement, at a time when producing area weather was fairly moderate, to people buying gas for storage injections in the Midcontinent and not necessarily taking it to the Midwest. Building storage constitutes the main demand in the central U.S. right now, he said.
The producer said he thinks the pace of refilling storage is proceeding fast enough that prices will start cratering by June unless some weather that is both very hot and very widespread comes along before then. He expects most, if not all, of the cash market to follow the screen lower Tuesday. He noted that June futures were continuing to fall even further in after-hours Globex trading Thursday afternoon.
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