Nearly all Midcontinent points joined the entire western market in seeing softer prices Friday, while most numbers were flat to higher in the Gulf Coast, Northeast and Midwest. Most of the East derived support from Thursday’s screen advance of 3 cents and a modicum of cooling load in the humid South. Prices in the West and Midcontinent were depressed by a lack of weather-related demand and a new California OFO.

Besides the occasional flat point, eastern gains were generally small in single digits, being limited by the usual weekend decline of industrial load, but ranged as high as about 20 cents at Tennessee Zone 6. The softness in the Midcontinent and West was more emphatic, with a solid majority of drops being a dime or more and ranging as high as about 45 cents.

PG&E was canceling Saturday an OFO that had been in effect for two days, but it was replaced by a high-linepack OFO declared for Saturday by SoCalGas (see Transportation Notes). And western prices not only were depressed by light weather-related demand outside of heat in the desert Southwest and a cold front that was likely to bring snow to some sparsely populated mountainous areas over the weekend, one source said, but Northwest’s requirement that interruptible storage holders at the pipeline’s Jackson Prairie facility empty their accounts by Wednesday (see Daily GPI, June 3) was putting extra supplies into the regional market.

The intrastate Texas market was dampened somewhat by rain in much of the northern part of the state, said a marketer who reported relatively moderate afternoon temperatures around 78 degrees in the Dallas-Fort Worth area. That contributed to a dip of more than 20 cents at Waha.

Cold fronts due in the Midwest and Northeast over the weekend meant little to gas prices besides stifling any potential air conditioning demand that might have arisen in early June.

Trading was “pretty volatile today [Friday],” commented a Northeast marketer. He reported seeing a lot of two-way interest that began with buyers being most active in the early going, succeeded by a selling wave around mid-morning, and then new buying interest surfacing near the end. Cash prices were still getting prior-day support from the screen, he said, but there was “no weather load at all” in the Northeast.

Looking toward this week, the marketer said a moderate Monday rally was likely after natural gas futures rose another 6.1 cents Friday, accompanied by a $1.40 spike in crude oil that carried the July contract to just above $55/bbl. The market could find support from some midweek heat, he said, “but right now the forecast is looking mostly like a repeat” of the past week’s weather.

Noting that Thursday’s report of an 86 Bcf storage injection during the previous week was less than his 100 Bcf estimate, Lehman Brothers analyst Thomas Driscoll said he “would characterize the injection rate as neutral — a contrast to the series of bearish inventory data that we have seen in recent weeks. Even though storage is about 20% greater than average, injection rates have been running roughly 20% above five-year averages. We believe injection rates need to slow to prevent storage capacity from being tested [in] late summer/early fall. We maintain our belief that gas prices may need to fall to less than $6.00 this summer to recapture markets from residual fuel.”

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