Prices rose at a majority of cash market points for a second straight day Thursday, and again the chief reason was prior-day strength in June natural gas futures. Quite a few points in the West provided a harbinger of what is expected in Friday’s market: major losses due to the shrinkage of weather-based load to near nothing. High-linepack OFOs by both of California’s biggest distributors contributed to overall western price weakness.

Most points were flat to up about 30 cents. A few Midcontinent locations joined much of the West in realizing drops ranging from a couple of pennies to about 65 cents.

The Energy Information Administration was in sync with consensus expectations in the mid 80s Bcf when it reported an 85 Bcf storage injection for the week ending May 16. Nymex traders turned what had been a June natural gas futures loss earlier in the morning to a gain and wound up with an eventual daily increase of 5.7 cents. For a change crude oil was on the retreat (see related story).

The West, which had been so hot in most areas just a week earlier, has cooled off to a major degree, so to speak. Inland California highs were expected to barely break 80 Friday and go even lower Saturday, and mild temperatures are due in the Rockies Friday. In the perhaps biggest surprise, Phoenix was expecting a high no greater than 71 Friday.

The South is still achieving only a modest amount of air conditioning demand with highs in the low to mid 80s in most of the region. Only Florida in the east end and Texas and Oklahoma to the west are seeing the kind of heat that gets a fair amount of gas-fired generating units dispatched.

And whatever heating load that was lingering in the Midwest and Northeast is about to disappear as both regions will be in warming trends that see highs rise to the low 70s Friday.

The PG&E citygate and Malin again proved remarkably resistant to the extension of a high-inventory OFO on the utility’s California Gas Transmission system into a second day Friday. The citygate was flat while Malin managed a small increase. However, to the south it was a different story as the Southern California border plunged about 60 cents as SoCalGas added its own high-linepack OFO for Friday (see Transportation Notes).

Weakness of the Southwest market was exacerbated when El Paso, which Tuesday had declared and then lifted a Strained Operating Condition (SOC) due to excess drafting, said Thursday it had set the possibility of an SOC or Critical Operating Condition to high due to excess linepack.

Florida Gas Zone 3 was up 20 cents after Florida Gas Transmission continued to warn of the possibility of an Overage Alert Day due to 90-degree weather being forecast for its Florida market area.

Transco echoed previous declarations by the two Columbia pipes in anticipating very weak market-area demand during the long holiday weekend due to forecasts of moderate temperatures. Transco said that to ensure maintenance of operating flexibility, effective Friday it will limit the pool balancing tolerance to 1% and will not allow any nominations that create due-pipeline imbalances.

Prices started strongly but didn’t move much for most of the morning, a Texas marketer said, and then most of them went up another dime or so after the storage number came out. Of course, most spot gas had already been traded by then, he added.

The marketer thinks suppliers will try to sell as early as possible Friday in anticipation of big price drops. Traders can expect quite a few pipeline OFOs or similar restrictions, he said, noting that some, such as both the Columbia pipes and Transco, have already warned of expecting extremely low market-area demand during the holiday weekend. As of Thursday, though, transportation seemed to be smooth for the time being, he said.

On the eve of bidweek the marketer quoted a few early basis numbers: Chicago at plus 4-5 cents, and Columbia Gas at plus 46-47 cents, which he said is unusually strong.

A Midwestern utility buyer said his company’s load was “down to almost nothing” currently. He reported being long on gas supply and expecting to have to sell some into what is likely to be a much weaker market Friday.

However, the buyer noted, his area was expected to peak around 87 degrees Sunday, and “I was running my air conditioner a few days ago” when the thermometer was only reaching 80. So the expected surge in cooling load in the middle of the holiday weekend means some people may come back to their offices Tuesday with short imbalances to make up, he said.

Temperatures “have been back and forth this week here,” said an Oklahoma-based Midcontinent producer. The high was a near-record 96 Monday, then it cooled down to “comfortable but muggy again” Thursday in the high 80s and continuing through the weekend. There was definitely some cooling load happening Thursday, he said.

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