High-linepack OFOs by both of California’s major transmission/distribution systems (see Transportation Notes) sent price tremors throughout the West Thursday, with nearly all regional points down by as much as about 20 cents. In the East, quotes were mixed fairly closely to either side of flat, although a few Midcontinent pipes fell by as much as a dime or so.

As expected with a major capacity constraint on Transwestern’s San Juan Lateral set to end Friday, the selling pressure into El Paso’s San Juan-Blanco pool eased, enabling it to emerge as the sole western point with a modest gain on the day.

A spokeswoman confirming the OFO by SoCalGas said weather in the Los Angeles area had been gorgeous for the last couple of weeks, which was “really nice” after the heat waves of last month. The glut of supply in the Golden State weakened the western market to an extent that even overnight lows remaining near freezing from the Rockies through the Upper Plains were not able to offset.

However, cold weather in Western Canada provided a morsel of support for intra-Alberta numbers, which fell only about C2 cents.

Early on, with the cash market starting to waver following two straight days of overall strength, it appeared that traders could expect softness for the weekend. That view seemed to be reinforced when the Energy Information Administration estimated a 76 Bcf storage injection for last week, which dovetailed nicely with most prior expectations but was considered moderately bearish against past comparisons. The screen apparently felt that way in quickly falling nearly 15 cents from its pre-report levels.

But then, as gas traders have become accustomed of late, a siren call was heard from Nymex’s trading pits for petroleum products. The crude oil, heating oil and unleaded gasoline contracts all soared, with gasoline establishing yet another all-time peak and crude recording its highest-ever daily settlement of $41.08/bbl. The oil action wasn’t over, though; crude for June delivery later rose to $41.17 in early after-hours trading, beating the previous record of $41.15 set Oct. 10, 1990 during preparations for the first Persian Gulf war. The oil strength lifted the natural gas screen to a gain of 7.5 cents on the day.

Although crude supplies were up by 1.1 million barrels in government inventory data released Wednesday, gasoline stocks surprised analysts by dropping 1.5 million barrels with their heaviest usage period of the year looming just around the corner (the Memorial Day weekend is traditionally regarded as the start of the U.S. summer driving season).

The storage number looked pretty neutral to a Midwestern marketer, but the turnaround in gas futures made it “anybody’s guess” on market direction Friday in her perception. It was hot and humid but rainy Thursday in her section of the Midwest, with temperatures slated to get a little cooler into the weekend. The marketer said she couldn’t help but wonder how badly all the super-high energy prices are harming the national economy.

Lofty energy prices were on the minds of others as well. A Texas-based producer said gas prices have risen to “ridiculous” heights even from his viewpoint, but he couldn’t rule out their going even higher. “It’s been scary over the last year how natural gas has followed the oil markets” to stratospheric levels, he said, undoubtedly recalling earlier times when gas and oil tended to go their separate market ways unless burnertip values clearly favored one or the other to a great extent.

The producer went on to note that for much of March and April, Florida Gas Transmission compressor station maintenance projects had put a major crimp in his South Texas production out of Zone 1. No such capacity limits are in effect now, and the pipeline’s Overage Alert Day notices (Wednesday’s notice was extended through at least Thursday) were a sure sign of rising demand in Florida, “so we’re up to about 65-70 MMcf/d” from Zone 1 wells now.

And a Northeast utility buyer wondered if, with spot prices “teetering on the brink” Thursday, it was time for a long-anticipated period of retrenchment to begin. “Everybody’s saying, ‘I don’t know why,’ but the market is still generally firm,” she went on. It still looked to the buyer like a “good pace of [storage] injection” was going on, and it didn’t seem like anybody wants to let up on stashing away storage at this point. However, she was a bit suspicious of the potential for a little price manipulation among suppliers. Are any holding back gas until they can get a higher price for it, she asked rhetorically.

The weekend weather picture is mixed. Cold fronts are due in parts of the Northeast and western sections of the South, but chilly weather in the mountain areas of the West are expected to subside. However, forecasts for next week generally call for above normal temperatures across much of the East and in the eastern end of the Southwest, along with generally below normal readings in the rest of the West.

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