Enduring an unpredictable week of violent storms, heat waves and the rollercoaster-like antics of the natural gas futures market, cash points on Friday moved in lockstep lower, with most points shedding just a few pennies up to 15 cents.

However, exceptions — in the way of 30-plus-cent drops — were found at a few locations in the Rockies, Midcontinent and on the West Coast. Despite the wide-ranging fluctuations of the natural gas futures market during the week, the Henry Hub continued to average right around the $12.50 mark. Even as July futures continued to make strides toward $13 earlier in the week, most cash traders found the air a little too thin at those price levels (see Daily GPI, June 13).

One East Coast gas buyer noted that the cash market has had a “bumpy road map to follow” during the week as futures bounced back and forth. With Monday and Tuesday recording losses and Wednesday and Thursday notching gains, Friday’s 17.3-cent drop in the July contract acted as the tie breaker, giving cash points the potential to recede a bit more after the weekend, he said.

“Most points were pretty weak Friday,” said a western trader. “The spreads widened a little bit on the day. The basins such as El Paso Blanco were down but [PG&E] citygate was strong. Everything is hovering around $12.”

Analyzing the Energy Information Administration’s 80 Bcf storage injection report Thursday for the week ended June 6, the trader said the market was surprised. “I think it was quite a shock to see a number that small. Expectations were in the mid 90s. There was a lot of cash volume traded prior to that number because there was a lot of uncertainty. I don’t think people wanted to have a position in place when the number posted. Then of course following the report, trading was at a furious pace again as people reacted. Fear and expectation always come into play.”

Looking at the six- to 10-day outlook, the trader said the West Coast looks to be heading for normal temperatures. “We’ve just had some heat, but we are starting to cool off as the marine layer comes in a little bit. It will be cooler along the coast while the interior will be a little warmer. For this time of June, we are right where we are supposed to be. Core loads are down based on usage, but in the weeks to come we are expected to see some above-average temps rolling in. The Northwest has a lot of hydro going on right now, so people are basically paying you to take their power. South of that there is a little drought, so the hydro picture in California is reflecting that.”

Looking at the temps so far in June, John Kocet, a meteorologist with AccuWeather.com, said, “The East has been too warm, while a sizable portion of the West has been too cool.” He added that the temperature pattern makes it “easy to see” why there has been so much rain across the Midwest. “All the storm clouds have been developing along the boundary between the two contrasting air masses.”

Taking a peek at the week ahead, Kocet said there will be a major alteration in the jet stream. “Unlike the first two weeks of the month, the jet stream is going to run much farther south in the Eastern part of the country,” he said. “The result will be a significantly cooler weather pattern from the Ohio Valley to New England. The pattern shift is also likely to lead to less rain across the waterlogged Midwest.”

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