The cash market used Wednesday’s expiration-day increase of 11.5 cents by June futures and moderate increases of cooling load in the South to range from flat to about 35 cents higher Thursday at most points in the Gulf Coast, Northeast and Midwest. However, mild weather in much of the West and excess supply issues resulted in sizeable price drops throughout the West and Midcontinent. Some western plunges exceeded a dollar.

A few scattered eastern points outside the Midcontinent joined in declines of a couple of cents to a little more than $1.15.

Because the transition to June falls on Sunday, Thursday’s trading was done for Friday-Saturday flows. Deals done Friday will be for Sunday-Monday flows.

The Energy Information Administration was within the range of prior estimates in reporting an 87 Bcf storage injection for the week ending May 23, but slightly above consensus expectations in the low to mid 80s Bcf. Nymex traders saw the report as “slightly bearish” (see related story), but goaded by a swan dive of more than $4 by crude oil, they sent the new prompt-month July natural gas contract down a whopping 52.1 cents.

While PG&E was extending a high-inventory OFO through Friday, SoCalGas waited until Thursday morning to issue its own OFO for Thursday and also kept it in place through Friday (see Transportation Notes). Although deals for Thursday had long been completed before the issuance of the SoCalGas OFO, one source said traders likely suspected that an OFO was in the making, having driven the Southern California border more than half a dollar lower Wednesday. The border took the biggest price hit of all Thursday.

It was a different situation on the other side of the nation where Florida Gas Transmission declared an Overage Alert Day due to hot forecasts for its Florida market area and low linepack (see Transportation Notes). The Florida citygate recorded one of Thursday’s top gains in response, although production-area numbers into the pipe saw only modest increases.

Gulf Coast quotes had some support from rising power generation load as high temperatures of 90 degrees or more begin spreading east from Texas and Oklahoma to as far east as Birmingham, AL, Friday. But cold fronts will keep weather-based gas demand minuscule in the Midwest and Northeast.

A Calgary-based producer had a perception of a fairly large supply excess developing, especially west of the Mississippi River. He pointed to the two California OFOs as partial evidence. He said he’d been trying to pay back some imbalances on the PG&E system recently but was unable to do so.

Prices may have peaked for the spring season earlier this week, although that remains to be seen, the producer continued. It’s getting warmer in Calgary area, which not only results in less demand, but also reduces Alberta production slightly as compressors have to work harder, he said.

The half-dollar-plus dive by futures Thursday, along with generally mild weather outside the southern tier of U.S. states, make it pretty likely that cash prices will be falling everywhere Friday, the producer added.

A western source noted that California has had mild temperatures for the last couple of days and they may last through Monday before a warm-up begins. He said he wouldn’t be at all surprised if the OFOs survive into weekend.

With the end of bidweek drawing near, the source said a lot of people were “holding their cards” close to the vest, waiting to see how much further prices might fall. He was still doing June baseload deals Thursday, citing averages of $9.20 for El Paso-San Juan (Blanco) and $10.91 at the PG&E citygate. Such a wide spread was very advantageous to those holding transport capacity, he noted.

The western source was among the few believed to have been trading June baseload Thursday. A Houston-based producer said he was not aware of any June business still going on. There probably was a little of it, he said, but most remaining bidweek deals got wrapped up after the futures settlement Wednesday.

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