With energy futures softness from the day before weighing on Wednesday’s cash market, there wasn’t enough air conditioning load left across the southern tier of states to keep prices from experiencing mostly mild losses. Quotes ranged from flat to down about a quarter; most losses were less than a dime.

In addition to weaker futures and weather support currently, sources suggested that traders were looking ahead to the major reduction of demand associated with a long holiday weekend and forecasts of milder weather next week as reasons for the strong Monday-Tuesday rally not being sustained any further. Also, a large storage injection report Thursday of more than 90 Bcf, as many expect, would have to be considered bullish as it would wipe out the remaining deficit to the five-year average, they said.

In its final day as prompt month, the June natural gas screen had little guidance to offer the physical market as it wavered slightly to either side of flat and finally went off the board down less than half a penny. Despite a government report Wednesday morning of an unexpected drop in gasoline stocks during the previous week and unchanged crude oil inventories, all of Nymex’s oil product offerings experienced moderate to sizeable drops.

A cool front descending slowly from the Midwest was leaving mild temperatures in its wake and starting to reduce power generation loads in northern sections of the South.

A high-linepack OFO by PG&E and a Critical Notice about no banking of gas on its system by Kern River (see Transportation Notes) were depressants of western prices. However, although SoCalGas did not issue an OFO, its border decline of about twenty cents was about a nickel greater than that of the PG&E citygate.

For one trader, the market has been little changed in the last two to three days. Waha was weak due to falling loads in intrastate Texas and the Midcontinent/Midwest, he said. Waha’s spread of about 40 cents below Katy would have been attractive, he added, “but there was no space available in the pipe” for the necessary transport.

A marketer noted that pleasant weather has dominated so far this week in much of the Midwest, so it surprised him how relatively strong the Chicago citygate was Wednesday in falling less than a nickel. “It didn’t make sense to try to flow gas from Chicago to the MichCon system” because of Chicago’s strength, he said.

Despite some retreat in hot weather, the marketer said he was definitely seeing more gas demand for power generation already, “so we’re eagerly awaiting the summer hot season.” At this time last year there was a lot of talk about fuel switching from gas, especially among generators, he went on, but that’s not so this year “because gas has become a better buy.” Noting the advent of the 2004 Atlantic hurricane season next Tuesday, he commented that forecasters in recent years have usually predicted very active hurricane seasons, but then actual activity would fall short of the forecasts. So the marketer doesn’t expect to worry about hurricanes “until their forecast is for a light season; then I’d load up on all the gas I could find. ‘Sell the hurricane’ is my motto.”

“I’m already done with bidweek,” a Northeast utility buyer said Wednesday afternoon. “It was about what we expected, no surprises.” The main feature of the June market was much higher prices, she added. However, in contrast to trader comments during the May bidweek about a scarcity of willing sellers, the buyer reported receiving “plenty of offers” of available June supplies.

A Midwest trader, after noting that he had hoped “for more action in the screen settlement,” said he saw Chicago basis coming off slightly going as the futures close approached. He looks for the June Chicago index to run 80 cents to a dollar higher than May’s.

Bidweek numbers were staying fairly steady in the perception of a western marketer. Wednesday seemed like an unusually quiet trading day to him despite being in the middle of bidweek and the day of the June futures expiry.

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