A few flat to barely lower points in the Midcontinent, Gulf Coast and Southwest mixed with moderate increases in the rest of the market Tuesday. Screen strength from the day before, along with continued storage buying, nuclear plant outages and power generation demand in the sultry South, were the major contributors to keeping this week’s cash bullishness from fading.

Although Tuesday’s gains ranged up to about 20 cents in the Rockies, most were in single digits.

At least one source expressed doubts, but several other traders pointed to June gas futures tacking on an even bigger uptick of 32 cents-plus Tuesday to Monday’s increase of nearly 18 cents as evidence that cash numbers likely will not be ready yet to enter retreat mode Wednesday. They also noted the major rallies in the crude oil and heating oil contracts Tuesday, with crude rising well over a dollar to climb back up to $28.50/bbl. In addition, one said, southern heat may have receded a bit since late last week but is still potent and starting to build again, while the Northeast continues to experience a bit of out-of-season chill.

Somewhat ironically, it was a Gulf Coast producer saying he didn’t “think this price firmness can keep going much longer.” End-users just can’t handle prices as high as they are currently and are complaining about it to him “all the time,” he said. Because of falling production and the urgency of refilling storage, the producer can’t see prices averaging much less than $6 this year, but said he was afraid that might hurt long-term demand. If last week’s storage injection “is reported as we think [above 80 Bcf] Thursday,” he believes cash will be coming off soon afterwards.

A Northeast utility buyer said temperatures remain “a little chilly, with highs in the low 60s” in her area. That has some furnaces being turned on overnight, but there’s no heating load of any significance during day, she added, “and we can expect more of the same through the weekend.”

Maintenance on Transwestern’s San Juan Lateral is helping keep San Juan prices firm this week, a marketer commented. Her company has been seeing a spread of 40 cents or so between Permian Basin and San Juan-Blanco lately, “and usually it’s more like 60-70 cents.” Normally Permian prices are below those at the Southern California border into SoCalGas but have been running consistently higher since May began. That indicates intrastate air conditioning demand in Texas is drawing most Permian gas eastward instead of toward California, she said.

Over the coming weekend, the Transwestern lateral constraint will shift from Ignacio-Blanco to the Blanco-to-Thoreau segment, which should weigh more heavily on San Juan pricing and perhaps give extra market access to Rockies gas, the marketer went on. The Kern River expansion price euphoria seemed to fade quickly after an initial burst at the start of the month, but now it seems to be building up again in the Rockies, she said.

Northwest has had so many restrictions on gas northbound through its Kemmerer Station bottleneck in Wyoming for nearly two years “that the latest one [on alternate services at Kemmerer that began Monday] is a non-event as far as I’m concerned,” remarked another western trader.

Florida Gas Transmission’s now-week-long Overage Alert Day notice has boosted the value of Zone 1 gas in Texas to near-parity with downstream Zones 2 and 3, a Texas-based producer said. His $5.99 Zone 1 quotes were barely a penny or so below the Zone 2 average Tuesday; a week earlier the gap from Zones 2 and 3 was 6-8 cents.

In its forecast covering next week (May 19-23 time frame), the National Weather Service calls for above normal temperatures in the southern group of states from Arizona to Alabama and in a region encompassing the western Northeast and eastern Midwest. It expects below normal readings along the Mid-Atlantic and South Atlantic coast, in the extreme southwestern corner of the U.S. and in most of the Pacific Northwest extending eastward to the Dakotas, with normal conditions likely elsewhere.

A cool East will be joined by a warm West as summer patterns start to take shape, New York City-based Weather 2000 said in an advisory Tuesday. It continued: “Earlier this month a Southern newscaster exclaimed about the steamy, hot weather gripping the nation. He described it as going directly from a cold winter to a hot summer, skipping spring. Although this may have temporarily been the case for a part of the nation, this description is inaccurate, misleading and a psychological (non-scientific) assessment. Newscasters often phrase things improperly, but it is surprising to see these rumors spread to various industries and even other forecasters.

“Back in April, when some ‘spikes’ of early spring warmth emerged, people got very anxious about impending hot weather. Between the yearning for warmth coming out of such a brutally cold and snowy winter, and remembrances of the dog days of August 2002, confident forecasts for hot months ahead [were] bound to sprout up. After all, NWS Seasonal Climate Outlooks and most other private outlooks have been campaigning for a hot spring/summer 2003 since mid-winter, and other forecasters have since strategically pushed their ‘hot outlooks’ deeper into the summer, after obvious miscues in April and May. Meanwhile, after all the hubbub in April, the month wound up being the coldest in 28 years for New York and the coldest in 38 years for Boston!

“Once again, the month of May now has been much cooler, and will end up much cooler, than rumors to the contrary. The key element here…is the form any warmth is taking and the regions to which any warmth is primarily confined. One really has to traverse the south-central (essentially Texas) and the western Gulf Coast regions to find locations that are significantly warmer than normal, and this will become abundantly clear when May concludes and HDD/CDD values are verified. Secondly, the ‘warmth’ (i.e., above normal CDDs) have mostly been caused by muggy, humid evenings, not by frequent afternoon spikes.

“One really has to be off in left field to try and state that the Northeast has been anything but cool, but even to the South and over toward the Midwest, May has been much cooler and/or abated than people may realize. For example: Neither Atlanta nor Birmingham has popped over 90 degrees even once, with Atlanta not even eclipsing 85 degrees, [and] Chicago has had more days this month that never got warmer than the 50s than days that broke 70.

“The final area where ‘The sky is falling!’ rumors have gotten out of hand, and will be proven erroneous, is across the West. Spoiled by some very large April-May CDD tallies in recent years, many got the impression that summer cooling demand is made or broken prior to Memorial Day for the West. Once again, to the contrary, July-September or June-October is really the heart of the West summer, and our research remains on track for net warm conditions. In the short term, we’re already starting to see the “buds of heat” with Phoenix hitting 96 yesterday [Monday] and flirtations with 100 degrees expected this week. Slowly but surely the southwestern U.S., followed by the Rockies and California zones, and eventually the Northwest, will show more consistent and robust signs of abnormal warmth. The “Wet Footprint” presently over the Pacific Northwest will abate in these locations the most, now and into the summer, but the surface-atmosphere feedback will be in flux and we’ll re-evaluate things in the months head.”

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