How appropriate! On the first official day of what is expected to be an especially active 2007 Atlantic hurricane season, the National Hurricane Center (NHC) announced formation of the year's second named storm in the eastern Gulf of Mexico late Friday afternoon. The news came far too late to affect the spot market, where all points fell Friday except for a small gain at Westcoast Station 2. Several Rockies points led the general declines with dollar-plus plunges.

Cooling trends in the Northeast, parts of the Midwest and the eastern end of the South meant that natural gas was losing a significant amount of the air conditioning load that had built up earlier in the week. In addition, the typical weekend loss of industrial load contributed to cash bearishness.

Nearly all of Friday's losses were in double digits as they ranged from about a nickel to nearly $1.20 at Cheyenne Hub. Most of the West joined the Rockies in seeing the day's largest declines.

Only Kern River, Northwest and Opal in the Rockies were able to avoid averaging less than $2. Western softness was exacerbated by PG&E keeping a high-inventory OFO in effect through at least Saturday and tightening the imbalance tolerance, while SoCalGas added a high-linepack OFO of its own for Saturday (see Transportation Notes).

Tropical Storm Barry was believed unlikely to be any threat to offshore production because as of late Friday afternoon the NHC projected that Barry would track northeastward from the eastern Gulf and make landfall approximately where Florida's Panhandle intersects with the state's peninsula. It was then expected to continue through coastal Georgia and the Carolinas before entering the Atlantic around the Virginia/North Carolina border. Such an overland tracking would tend to weaken the storm considerably.

At 5 p.m. EDT the center of Barry was about 320 miles southwest of Tampa, FL, and about 235 miles west of Key West, FL, the NHC said. It was moving toward the north with sustained winds of nearly 45 mph.

It's gotten pretty mild in a lot of places, a Texas-based marketer noted, and as a result gas is losing some air conditioning load. He expects a fairly strong cash rally Monday, saying Henry Hub was being bid and offered for the balance of the month at $7.74-76 Friday afternoon, which was about 20 cents above its average that day.

A Southern utility buyer said his company had injected into storage pretty strongly during May and will continue to do so in June. It probably will do only a little swing buying since it didn't leave much of its pipeline capacity open. "We're still waiting for 90-plus [degree] weather, but through [this] week the forecast is still in the 80s," he added. He reported having sold some forward hedges in order to buy cheaper baseload gas for June.

It's getting hotter but not too uncomfortable, said a marketer in the Upper Midwest. But her area is due to return to considerably cooler "seasonal" weather this week, she said. Temperatures will get down to the upper 40s one night, but that shouldn't create any heating load because daytime highs will still get up to around 70.

Her company was not purchasing any spot gas for the weekend, preferring to wait it out for lower prices. "We think we have plenty of time but want to add to our customers' storage accounts," she added.

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