Instead of “following the screen” strength of the previous few days, cash prices found weak fundamentals to be a more compelling influence Friday. Quotes dropped across the board by anywhere from a little more than a nickel to more than 40 cents. The largest declines tended to cluster in the West and Northeast, while most of the smallest ones were in the Gulf Coast.

A southward-moving cold front was leaving substantially cooler temperatures behind it from the Midwest through Montana and Wyoming. The Weather Channel cited a Canadian high-pressure was causing temperatures 10-30 degrees below average in the Plains states. Much of the Northeast was still fairly hot Friday, although parts of New England, particularly around the Boston area, were starting to chill out already. However, the cold front was due to envelop the rest of the region over the weekend.

Friday’s softness closed out what had a bullish week for gas until then. As a good measure of how strong the market was up until then, on Thursday some points were flat or at small premiums to first-of-month indexes, while many of the rest were less than a dime below index. Contrast that to the premature end of daily trading on Thursday in the previous week, when averages ranged from about 60 cents to nearly $1.20 below index. But after Friday’s retreats, virtually all points had returned to double-digit discounts.

A Northeast trader dismissed the energy futures strength of the previous day as insufficient to overcome negative market factors. “I made the right call” on the big dropoff in the Northeast market, he said. Power loads and prices were off big-time, he said, adding that utilities were telling suppliers they didn’t expect to run their gas peaking units over the weekend. “If you sold early, you did very well.” Prices dropped as much as 20-25 cents in not much more than an hour, the trader said. For example, Dracut started in the low $6.80s but wound up in the low $6.60s, he said.

The trader did note that quite a few Monday-only deals got done at modest premiums to full-weekend prices because some heat was forecast to be returning to the Northeast that day.

A Midwest marketer also said the forecasts of mild to cool weather across the northern U.S. had made it apparent to him Thursday that prices would be going down for the weekend. Besides negative weather influences, he mentioned the usual drop in weekend demand and a moderately bearish storage report the day before. The storage build was greater than expected, he said, and because of the trading suspension on the previous Friday for former President Reagan’s funeral, he expects the next storage report to feature a big refill, “so I think we’re looking at three large injections in a row.”

“We haven’t gotten really hot yet in the Midwest,” the marketer continued, so the power generation load so far this summer has been lagging expectations.

Gulf Coast gas tended to hang on to its value better than other areas because there is a fair amount of air conditioning load in the region. Daily highs were expected to top 90 degrees from Texas through Florida during the weekend.

A high-linepack OFO by PG&E along with cool weather in the Rockies helped depress western markets despite blazing heat continuing in the desert Southwest. Despite the OFO, the PG&E citygate’s drop of nearly 30 cents was about 15 cents less than that of the Southern California border. Western traders had expected the Palo Verde nuclear to possibly be ramping back up Friday from a total outage that had started Monday. However, as of Friday morning only Unit #1 was starting to return to service, with plant operator Arizona Public Service saying that 100% performance likely would not be achieved until near the end of June (see story in Power Market Today).

Some extra British Columbia production was due to come back online Sunday when Westcoast’s Pine River Gas Plant was scheduled to restore 70.1% of normal capacity during its ongoing annual turnaround. A trader estimated that would add 70 MMcf/d or so to the market. Pine River is due to return to full operation when the turnaround ends July 2.

Nobody is talking about July business yet, a marketer said, although he thought a few deals might start getting done early this week. He expects Friday to be the most active day of bidweek, saying, “Usually I see more next-month trading on the day before the futures settlement” than on the actual day of expiry. One thing that could complicate trading for July is the College World Series in baseball. He estimated that as many as 500 members of the gas trading community will be in Omaha late this week for the championship rounds of the tournament.

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