A small gain of about a dime Friday at Texas Eastern-East Texas kept the market five-for-five in recording mixed price changes last week. But an abundance of softening prevailed at all other points as widespread moderate weather was forecast to return during the weekend and June futures continued a string of declines dating back to the previous Friday. Naturally the extra loss of industrial load during a holiday weekend contributed to the cash bearishness.
As on Wednesday, big Rockies declines of up to about 95 cents were out in front of the parade of softness. However, unlike in Wednesday's trading when Rockies points were still averaging above $3, the averages were solidly below $2.70 Friday. CIG and Questar saw sub-$2 quotes, with Questar dipping as low as $1.50.
The Gulf Coast, Northeast/Appalachia and Michigan citygates displayed the greatest relative strength in a falling market by limiting their dips to a range of about a nickel to a little more than 30 cents. But although delivered prices in Michigan fell less than a dime, the Chicago citygate was taking a dive of nearly 40 cents. Most Midcontinent points fell by about half a dollar or more.
The heat blast that took Northeast highs above 90 degrees Friday was due to start receding Saturday, although not by much. However, the cooling process would continue through the weekend as a cold front approached from the west, taking regional afternoon highs back to the 60s and 70s, The Weather Channel said. The Midwest was expected to see comfortable temperatures in the 70s, and air conditioning load for gas in the South would be mostly moderate with temperatures peaking in the mid 80s.
Except for temperatures approaching or occasionally exceeding 100 degrees in the desert Southwest, seasonal weather was due to continue in most of the West. Regional oversupply issues remained in effect, with both SoCalGas and PG&E extending high-linepack OFOs through at least Saturday. And Kern River, which had reported high linepack in two (of four) segments Thursday, said Friday the condition had spread systemwide.
Eastern pipelines also had some problems with higher gas volumes than desired. MRT issued a System Protection Warning that would be in effect Saturday through Monday and barred the creation of long imbalances. And Columbia Gulf repeated on Friday its notice from Wednesday (see Daily GPI, May 24) requiring the elimination of positive imbalances and not allowing creation of any new ones. However, although Southern Natural Gas had warned Thursday that a Type 6 OFO for Saturday and Sunday was "highly likely" for long imbalances, it reversed that call Friday and said an OFO was "unlikely" on either day.
Besides the approaching weather moderation, the bearish storage report from Thursday was a factor in Northeast prices moving lower Friday, a regional marketer said. Boston reached 92 degrees Friday, but would peak in the mid 80s Saturday and continue falling from there, he said. Besides, there was "not that much" extra power generation load for air conditioning during the brief heat blast, he added.
Spreads from Henry Hub to the Northeast tightened a bit, the marketer continued, but traders were still able to transport profitably. However, he said he was aware of some people who "turned off" their transport to the market area.
He expects at least a modest price rally Tuesday, saying traders are "still a little hesitant to go short" with hurricane season drawing near amid forecasts of a hot summer.
Disagreement over the pace of bidweek activity continued. The marketer said he thought most people finished their June baseload deals Friday; he knew that his company intended to do so. But in a Calgary-based producer's opinion, there will still be fair amount of trading to be done Tuesday and possibly beyond. He perceived little getting done Friday because of many traders either being off or leaving the office early for the Memorial Day weekend.
The marketer said he was doing basis deals Friday at plus 67.5-68 cents for Texas Eastern M-3, plus 73 cents for Algonquin citygate and plus 69 cents for Tennessee Zone 6. New England basis for June was essentially unchanged from Thursday, he said, but basis at other Northeast points was a tad weaker.
Considering how Nymex was falling all last week, the producer in Calgary thought it was a "fairly uneventful" spot market. NOVA Inventory Transfer (NIT) numbers were staying flat to the screen at about $1.12 back, he noted. NIT was a little stronger at first Friday but then fell off as people got out of their positions for the week, winding up down C15 cents, he said. TransCanada tolls and basis spreads continued to allow shippers to make money by moving gas from Empress to the Northeast and Midwest, he noted.
Although they differed on when bidweek trading would wrap up, the producer agreed with the marketer in expecting spot prices to increase Tuesday. Calgary was experiencing snow as recently as Thursday but should be warming up to normal by then, he said. He noted that Eastern Canada was feeling the same heat levels Friday as the Northeast, but high temperatures also should be short-lived there.
Citigroup analyst Tim Evans said late Thursday he was projecting storage injections of 115 Bcf and 120 Bcf for the weeks ending May 25 and June 1, respectively. Both numbers were 10 Bcf higher than his earlier estimates through Wednesday.
The number of drilling rigs actively searching for natural gas in the U.S. rose by five to 1,471 during the week ending May 25, with all of the increase coming in the Gulf of Mexico, according to the Baker Hughes Rotary Rig Count (http://intelligencepress.com/features/bakerhughes/). Its tally was up 1% from a month earlier and 7% higher than the year-ago figure.
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