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Except in Parts of West, May Starts Above April Levels
With some exceptions in the West, May pricing began Friday anywhere from flat to as much as about a quarter above April-ending levels. Cold weather that had been supporting Rockies prices through Thursday was due to yield to thermometer levels 5-20 degrees above average over the weekend, and thus that region saw most of the losses, topped by dips of about 30 and 15 cents at the highly temperature-sensitive CIG and Cheyenne Hub points respectively.
San Juan Basin and border-SoCalGas quotes also fell as unseasonable heat earlier in the week in California and the desert Southwest continued to subside. However, Malin and the PG&E citygate saw gains of about a nickel. PG&E, which on Thursday had projected that linepack might exceed its maximum target levels during the weekend, as of Friday only expected linepack to bump up against those levels.
A cold front that had entered the Midwest Friday was having its sharpest impact in the Upper Plains area, which caused Northern Natural’s demarc and Ventura points to realize the largest advances over end-of-April prices. Chicago citygates also were quite a bit stronger, but Michigan citygates, which had run about 30 cents above Chicago recently, saw only small increases.
A Northeast marketer said he could not really see any weather load behind Friday’s mild firmness in the region, but thought it was mostly the transition to a new month’s market that caused prices to move higher. Likely quite a few traders went into the month short and were starting to catch up immediately, he suggested, and he believed storage buying was remaining strong. Also, current cash numbers are “a little deflated” in relation to the July-August screen, he noted.
A marketer in the Midwest said the weather there was still on the cold side Friday and would remain so into the weekend, but temperatures on either side of 70 degrees were expected during the coming week. She reported trading Michigan citygates in the low to mid $6.00s, which was about a dime or so below where she expected first-of-month indexes to be.
Actually, mild weather is anticipated in most of the U.S. in the coming week, which prompted natural gas futures to slip a little more than 6 cents Friday after wavering on either side of flat for much of the day. As a producer observed, “We are in May after all, and expectations for beautiful weather get no higher.” But oil product futures advanced; crude saw only a small gain, but unleaded gasoline surged to yet another record high.
Citigroup’s Kyle Cooper said his initial estimation of the upcoming storage report calls for a build in the mid to upper 60s Bcf. Such a volume, compared with last year’s injection of 82 Bcf in the same period, would reduce the year-on-year surplus.
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