Traders took care of swing business through the end of May Thursday, with moderate gains of up to about 15 cents (most in single digits) dominating over several scattered points that ranged from flat to down a little more than a dime. Although cooling load is growing only at a snail’s pace in the South, sources said screen strength Wednesday in the June contract’s expiry and Thursday in the July contract’s prompt-month debut was enough to drive the mild burst of bullishness.

Despite generally benign weather fundamentals lingering, an ostensibly bearish storage report and the usual demand drop over a weekend, a couple of eastern traders said they expect upticks of about a dime or so in Friday’s deals covering the Sunday-Monday period. Again they based their outlook on strong futures (the natural gas screen added a nickel Thursday while the crude oil and heating oil contracts also advanced strongly, with crude managing to hurdle the $29/bbl barrier by a dime).

“Cash should be up Friday because Nymex strengthened a lot,” commented a producer. The screen was down in the mid $5.90s while cash was trading Thursday morning, he said, and its recovery of about a dime that afternoon was fairly impressive, although “it was surprising to us to see the screen pop like it did.”

One common theme among sources in northern climes, from the Northeast through the Midwest and in Calgary, is that their temperatures in recent days and for the foreseeable future are so mild that neither heating nor cooling load is easy to find. “We’ve got no need for air conditioners or heaters,” said a Midwest utility buyer who was in a gas selling mode Thursday. “Just keep the windows open.” A Calgary-based producer said local weather “is great in the low 70s.”

And a Northeast source, remarking on the unusually low volatility at most points Thursday, chimed in that he knew of many traders “wishing for some air conditioning load outside the southern U.S.” to get the market jump-started.

Despite the concentration on two-day deals Thursday, an industrial end-user said he expected to be shopping Friday for a Saturday-only package and didn’t expect much trouble in finding a willing seller. Several of his plants are under curtailment currently, he added, because it’s hard to make money when your primary cost component is natural gas feedstock at such high prices.

“I don’t know who decides that everyone trades till the end of the month (30th-31st) today [Thursday] and the first two days of July on Friday,” a marketer said. “Although I don’t think there is much impact to the market due to the odd trading days, there is less volatility. With deals done a day in advance, the effect of the storage injection is lessened. I like this system, but I also like a stable market. I guess traders who like more risk are not as happy, but they can always try day gas.”

Another marketer lamented selling “too much too early” at Waha, saying late numbers there were up a little more than a nickel into the mid $5.50s.

A high-linepack OFO by PG&E (see Transportation Notes) helped cause one of the day’s few price drops at the utility’s citygate. But high-linepack concerns weren’t confined to the West. Texas Eastern (Tetco) said it “is anticipating a period of low demand due to moderate weather in the market area. Due to these mild temperatures coupled with higher linepack levels, [Tetco] will have limited ability to absorb due-shipper gas into the system.” Effective Friday it is not scheduling any incremental due-pipeline payback gas until further notice.

The Energy Information Administration reported a pull of 95 Bcf from storage last week, a volume at the top end of previous expectations. But after treating the report as moderately bearish for a while, Nymex traders eventually yielded to technical factors in sending the screen to its eventual daily gain.

The National Weather Service continues to present gas traders with a generally bearish outlook. In its forecast for the June 3-7 period, NWS expects above normal temperatures throughout the U.S. east of a line running from West Texas through eastern Minnesota. It predicted below normal readings from the Rocky Mountains westward, with a band of normal conditions separating the other two regions.

Besides helping lift end-of-May cash, screen firmness Wednesday and Thursday was credited with generating a run-up in June numbers. A trader quoted a Thursday Waha purchase in the mid $5.60s, up considerably from previous bidweek deals on either side of $5.50.

A producer reported selling a Chicago citygate package at the NGI index minus a penny.

According to a Northeast utility buyer, “One thing really conspicuous in the market is the spread between spot and bidweek. At a little more that 30 cents, it shows the disconnect between weak end-of-May pricing and the perception that warmer weather will arrive in June and prices in that month should be higher.” He noted that his company’s storage accounts were 40% full as of Thursday, “which puts them right on target and slightly ahead of the national average. Our strategy for storage remains the same: Be diciplined with injections. Don’t let price dissuade us from putting gas into the ground. In prior years we had some discretion with when to fill storage. This year we are putting gas into the ground each day.”

The 2003 Atlantic hurricane season officially begins Sunday, although Tropical Storm Ana got an early jump on things with an appearance more than a month ago (see Daily GPI, April 22).

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