The market found enough cooling load building in the southern tier of U.S. states and enough residual cold weather in northern market areas and the western half of Canada to post increases at all but two points Thursday. There were also indications of strong storage buying, and the 17.4-cent advance by May futures Wednesday gave an extra boost to Thursday's cash prices.
Only a drop of a couple of pennies or so by Northwest-South of Green River and flat quotes for El Paso's San Juan Basin-Bondad pool were left out of the overall advance. Otherwise, gains were remarkably consistent across geographic market areas in ranging from about a nickel to nearly 45 cents. Nearly all of them were in double digits.
Thanks to most of the coldest weather being currently concentrated in the Pacific Northwest and Western Canada, the Pacific Northwest-oriented points of Kingsgate and Stanfield have joined the once sparsely populated stratosphere of $10-plus averages, while Sumas fell barely short of the $10 level. Of course, outside the Midcontinent, West Texas, Rockies and Western Canada, nearly all of the rest of the market was sporting quadruple-digit averages Thursday.
A solid majority of points traded at dollar-plus premiums to their respective first-of-month indexes, and nearly all of the others are 65 cents or more above index. El Paso-Bondad was the only point at a deficit (a little more than 45 cents) to index.
Although parts of Georgia and the Carolinas are still limited to the mid to upper 70s, most of the South is now recording daily peak temperatures in the 80s, and the desert Southwest is about to experience the 90s again. Power generation demand for gas has grown fairly strong in those areas, one source said, although it's nothing like what it will be in mid-summer.
The Midwest and Northeast are seeing moderate daytime temperatures in the 70s, but overnight lows in the 40s in much of those regions means some furnaces are still burning. The Minneapolis low was forecast to be not far above freezing Friday, and Duluth, MN, near the Canadian border was expected to get to 29 degrees.
The Rockies also has returned to near-freezing lows, and in Western Canada Calgary barely broke above the freezing level Thursday.
The Energy Information Administration reported a 24 Bcf addition to storage during the week ending April 18, which was several Bcf less than consensus expectations of 29-30 Bcf. Nymex traders had an initially bullish response to the number -- more than 20 Bcf less than the five-year average for the comparable week -- and sent May natural gas futures to a high of $10.945 on the day. However, retrenchment set in, likely spurred by a $2-plus plunge in June crude oil prices, and the gas contract wound up with a meager increase of 0.9 cent on the day.
Rockies Express Pipeline (REX) sponsors said they continue to pursue activation of the final 210-mile segment of REX-West from the ANR interconnect in Brown County, KS, to the Panhandle Eastern interconnect in Audrain County, MO. However, according to a bulletin board posting made late Wednesday afternoon, "There is some risk that the remaining portion will not be in full service by the end of the month."
A Midcontinent producer was not especially surprised by the cash market strength. Although his region will be cooling Friday, on Thursday it was about as hot as most of the South, he said. And he noted that more Canadian gas was being kept at home than usual because of the persistence of cold temperatures in the western part of the nation.
The producer said Thursday's price gains were mostly driven by storage buying and local weather conditions. People were expecting softer prices than what they actually got in April, and they realize it's time to step up storage refill activity.
A lot of buyers are lining up for May baseload, he continued. He reported a Panhandle Eastern deal for May at index plus 2 cents, and said he thinks most index-based deals will also be done at a small premium. Checking his ICE screen, he noted rising fixed prices, saying Panhandle Eastern began the day in the mid $9.10s, got as high as $9.42 and was averaging about $9.29.
A Texas-based marketer said cash prices ran up after the storage report. That represented only a small part of daily market since most trading had been completed by then, he said, but it indicates the likelihood of continued firmness Friday. He counted himself among those expecting higher cash quotes again Friday, noting the build-up of air conditioning demand across the southern third of the U.S. and the fact that the nights are still pretty chilly in much of the Midwest and Northeast. He was unaware of any transport constraints of any significance.
The marketer said the Chicago citygate traded for May at basis of minus 4-3 cents Thursday and at the NGI index flat. Fixed-price Chicago numbers were mostly $10.72-73, he said.
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