Moderating weather, continuing energy futures weakness and falling prices in Tuesday’s later deals led to across-the-board softening Wednesday. Declines were in double digits, with most in the teens, but they ranged as high as about 30 cents in the Rockies.

It appears that the last vestiges of winter-like temperatures are bidding the weather scene adieu and yielding to genuine spring conditions in nearly all markets (exceptions are Canada and the northernmost parts of the Midwest and Upper Plains, where lows near freezing were still being recorded Wednesday). At least that’s how one Northeast utility buyer sees it. “This [Wednesday] is the last of the cold days in the Northeast, hopefully” until next autumn, she said. The buyer added that her company and some other regional utilities have been diverting gas that normally would have gone into storage to current burns, but thinks they will be able to return to their regular injection schedules soon.

Only the desert Southwest is currently experiencing weather hot enough to spur appreciable air conditioning load, but Texas and other parts of the South could be joining in next week since above normal temperatures are predicted for the eastern half of the U.S.

For a Houston-based marketer, Tuesday’s futures weakness was the primary cause of the downturn in prices. It depends on what kind of storage injection the Energy Information Administration reports Thursday whether the market will be able to rally in the near future, he said; otherwise the marketer didn’t expect anything but fundamentals-related weakness for a while. He did express one caveat: radical new developments in world oil markets could send their product prices soaring and lift natural gas again, as has happened several times recently. “There’s no chance of EIA announcing a withdrawal; it was too mild last week,” he said.

Most of the energy contracts got taken lower again Wednesday in the Nymex trading pits, but May heating oil managed a rebound. The natural gas screen fell 4.4 cents, while crude oil lost 49 cents to $36.72/bbl. All the products recovered somewhat from earlier lows after a delayed government report revealed a build in petroleum inventories last week that was significantly less than expected.

Lehman Brothers analyst Thomas Driscoll estimates that demand for natural gas as an industrial feedstock for four “key categories of users” has fallen about 1 Bcf/d, or 17%, since 2000 (see related story). Feedstock users of gas and natural gas liquids, such as makers of methanol, ammonia and ethylene, are quite price-sensitive, and their demand destruction though plant closures or operational cutbacks helped lead natural gas consumption to a 10-year low in 2003, Driscoll said.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.