Cash prices rose again at most points Wednesday as both they and the screen were bolstered by news of a major loss of Gulf of Mexico production. Moderate amounts of cooling load were resurfacing as temperatures began to rise in the Southwest and the central and eastern sections of the South. Cooling demand was going up a bit in parts of the Midwest but retreating in the Northeast.

Although it did not come out until the bulk of cash trading had been completed, a forecast of an active 2008 Atlantic hurricane season by the Colorado State University team (see related story) further added to the physical market’s bullishness.

Flat to about a nickel lower numbers at several points, nearly all in the Northeast, were exceptions to overall advances ranging from a little less than a dime to about a quarter.

The deepwater Independence Hub platform had been flowing about 900 MMcf/d when bubbles were noticed rising to the surface Tuesday, and a remotely operated vehicle confirmed a leak in the Hub’s export pipeline Wednesday morning (see related story). Majority owner Enterprise Products Partners estimated that it might take one to four weeks to make repairs, but a futures broker offered the opinion that in today’s high-price environment, the low end of that estimate was most likely (see related story).

The Independence outage and hurricane forecast were among a series of bullish news items that caused May natural gas futures to spike by 35.9 cents Wednesday, which will provide prior-day support to Thursday’s cash trading.

The Weather Channel said Northeast temperatures will be roughly 10 degrees above average Thursday as the region continues a gradual warming trend. The Midwest will be a mixed bag as rising temperatures at some locations will be countered by cooling temperatures at others; lows will remain in the 30s or below freezing in areas near the Canadian border.

The South is warming into the 80s in its central and western sections but still limited to the 70s in most of the eastern end except for Florida. Freezing lows will continue in the Rockies, but inland California and the desert Southwest are rebounding from lower-than-normal temperatures earlier in the week.

After going up 28 cents Tuesday when PG&E announced a customer-specific OFO, the PG&E citygate trimmed its gain to about 15 cents Wednesday even though the OFO was expanded to a systemwide one (see Transportation Notes).

It was far from overwhelming, a Gulf Coast producer said, but he could definitely detect a tightening of supplies in the region resulting from the Independence outage. “Some of the pipes were a little tougher to find gas on” than usual, he said, but added that at least in his own case, there were no calls for intraday gas to replace the loss of Independence supplies.

Wednesday’s screen spike probably will keep cash prices rising Thursday, the producer continued, but gains may be limited because the cash market has already been much stronger so far this week in the face of relatively moderate weather-based demand. Prices were rising as trading proceeded Wednesday, which is usually a reliable signal of next-day firmness, he said.

A marketer in the Upper Midwest said there had been a lot of “good outdoors weather” in recent days but it was getting cooler again. Snow was a possibility for the weekend before a new warm-up begins around the middle of next week, she said. The marketer noted that normal high temperatures for mid-April in her area are in the low 60s. Her company is buying only “little volumes” of spot gas so far this month, as it keeps hoping that prices will eventually recognize shoulder-month realities and come down to what it considers more reasonable levels.

The National Weather Service (NWS) sees an East-West divide in weather trends next week. In its six- to 10-day forecast for the April 14-18 workweek, NWS predicts below-normal temperatures everywhere east of a line running south from the northeast corner of Minnesota through eastern Oklahoma before curving to the southwest through central Texas. It also expects below-normal readings in the western third of Washington state. Above-normal temperatures are predicted between two lines: one running south from eastern North Dakota to West Texas, and the other curving to the south-southeast from eastern Washington state to the northwest corner of California.

Barclays Capital Research analysts George Hopley and Michael Zenker are calling for an 11 Bcf storage withdrawal to be reported for the week ending April 4. Ron Denhardt of Strategic Energy & Economic Research weighed in with a prediction of a 7 Bcf pull.

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