Moderating weather trends appeared to trump Monday’s 31.7-cent spike by expiring May futures as the primary influence on cash trading for the end of April Tuesday. The result was mixed price movement in the East in which most points moved up or down by a dime or less. However, mild temperatures in the Rockies and cool conditions in California caused major losses in the Rockies market and mostly lower prices in the rest of the West.
Many points ranged from flat to up a little more than 20 cents; most of the gains were in single digits. Losses were as small as 2-3 cents but ran as high as a little more than 70 cents. In addition to the Rockies, the Midcontinent market tended to see more price weakness than other areas.
Tuesday’s cash trading had plentiful prior-day screen support, but the guidance for Wednesday is highly negative after the June natural gas futures contract made its prompt-month debut with a plunge of nearly half a dollar (see related story) amid an overall meltdown in Nymex’s energy complex, with June crude oil sinking by more than $3.
Lows that are expected to be in the 30s and 40s Wednesday helped most Northeast points to continue rising. However, the gains were modest as milder weather is forecast for later in the week there and in the Midwest.
The South is beginning to regain some cooling load after a weekend cold front wiped out most of it. However, regional highs Wednesday are expected to be limited to the mid 70s to low 80s, so no great upsurge of power generation demand is occurring yet.
Mid 70s highs in Denver Tuesday and Wednesday indicate how the Rockies market has lost much of its internal heating load. And mild to cool conditions are dominating California weather, while the desert Southwest is due to cool off a bit Wednesday.
ANR ML-7 fell a little more than 30 cents as a transportation constraint at the pipeline’s Sandwich Compressor Station in Illinois ended Tuesday (see Transportation Notes).
In a late Monday afternoon update on the status of final commissioning activities for the 210-mile section of Rockies Express Pipeline (REX) from the already operational ANR interconnect in Brown County, KS, to the Panhandle Eastern interconnect in Audrain County, MO, REX said it “is hopeful that the pipeline will be authorized for service during the first half of May.” When the first part of the segment known as REX-West to as far east as the ANR interconnect was activated in mid-January, it was assumed that the remaining section would be placed in service in early February (see Daily GPI, Jan. 15). The pipeline has cited adverse weather as the cause for numerous delays in finishing REX-West.
“The line is expected to be completely purged by tomorrow [Tuesday],” Monday’s update said. “Line packing will commence once authority is obtained. Rockies Express is working with applicable regulatory agencies to document the as-built pipeline facilities and assure quality control…Putting the remaining portion of REX-West in service will occur pursuant [to] the receipt of final regulatory approvals. The increase in demand charges for full service shall become effective on the day in which the pipe is placed in service at the [Panhandle Eastern] point.”
A Southern Natural Gas bulletin board posting helps illustrate the storage refill bullishness that has helped boost futures and cash prices in recent weeks. With total working gas storage capacity of 60 Bcf, Southern said that as of April 24 it had inventory of 23.1 Bcf, of 39% of capacity, in its two fields. That compares with 32.7 Bcf (55% of capacity) on April 26, 2007 and 40.8 Bcf (68%) on April 27, 2006.
The extreme weakness of futures caused late spot prices to soften, said a Midcontinent marketer. The big screen dive and forecasts of moderating weather in northern market areas lead his company to expect big losses in the cash market Wednesday, he said.
The marketer said his company finished the May bidweek Tuesday with just a little bit of fixed-price trading. May baseload numbers were down a little from Monday because of the futures plunge, he said.
It is rare to still be talking about snow in the U.S. on the second-to-last day of April, but some regions of the Northern Plains still have snow on the ground, and snow levels in the Pacific Northwest and Western Canada are still running well above normal because of a very cold spring, according to Daniel Guertin of Lehman Brothers. “Despite this, however, April 2008 is on track to be 15-20% warmer than April 2007,” he said in a Tuesday morning advisory. “In April, the warmest year-on-year changes have occurred across the South and East, and the coldest changes have occurred in the Northwest and northern Rockies.”
The National Weather Service (NWS) expects normal temperatures to prevail in most of the U.S. during the May 5-9 workweek. It predicted above-normal readings in three areas: in a wide oval straddling the Nevada-California border and including a small section of northwest Arizona; in the southern half of Texas, all of Louisiana except for a narrow strip along its northern border, and the southern third of Mississippi; and in northern New England. NWS looks for below-normal conditions in a wide, mostly sparsely populated swath that includes all of Washington state and the northern half of Oregon and stretches through the Pacific Northwest to the southern border of Kansas and to Wisconsin and Michigan’s Upper Peninsula.
Stephen Smith of Stephen Smith Energy Associates said Tuesday he is projecting a storage build of 83 Bcf for the week ending April 25, adding that the volume is up from a previous estimate of 76 Bcf. Ron Denhardt of Strategic Energy & Economic Research weighed in with an expected addition of 75 Bcf. Looking further ahead, Citigroup’s Tim Evans expects injections of 70 Bcf, 50 Bcf and 75 Bcf to be reported for the weeks ending April 25, May 2 and May 9, respectively.
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