With some of the new-found air conditioning load that had helped support prices at midweek starting to fade again and chilly weather in the Rockies and north-central U.S. moderating from the other direction, cash quotes ranged from flat to down a little more than a dime at nearly all points Friday. The slump in industrial demand typically associated with a weekend also contributed to the generally mild bullishness.

The conspicuous exceptions to the overall trend were a plunge of 30 cents at the Southern California border and declines on either side of 20 cents in El Paso’s two San Juan Basin pools. Those markets were hamstrung by SoCalGas extending a Friday evening high-linepack OFO into Saturday (see Transportation Notes). PG&E, which lifted a similar OFO for Saturday, saw relatively minor declines of about a nickel or a little more at Malin and the PG&E citygate.

It was clear that weather fundamentals were weakening from a glance at the map: Friday’s highs ranging from the mid 60s to the low 80s throughout most of the U.S. were expected to prevail largely through the weekend. However, a cooling series of rainstorms was due to end in most sections of the South Saturday, leaving the region to assume its delayed role of “air conditioning central” by Sunday, according to The Weather Channel.

Thursday’s rise of 7.5 cents by natural gas futures had no delayed boost for cash numbers Friday. The screen gave back nearly 8 cents Friday, despite the crude oil and unleaded gasoline contracts going on to post more record highs (heating oil did see a moderate retreat).

The intrastate Texas market was a little weaker overall, but Waha/Permian numbers were weakest of all, said a marketer. Waha/Permian gas was still getting little call to satisfy cooling load from Texas and the Midwest, and the SoCalGas OFO depressed demand from the west, he said. The marketer noted that for the first time in a long time he was able to pick up some really cheap “distress” gas at Katy Friday; the key was having a place (market or storage) to take it. He found it amazing how crude oil and unleaded gasoline futures managed to scale even greater peaks, having been sure that profit-taking would bring them down.

A Houston-based trader, quipping that he was doing all the “usual Friday fun stuff,” said Chicago citygates didn’t move anywhere; they were a little higher early, but came off again near the end. He remained unable to detect any substantial power generation load coming out of the Midwest. Chicago has traded even with Henry Hub for the last couple of days after having wavered about 3 cents higher or lower previously, he said.

Similarly, there was “not a whole lot of activity” in the Northeast as citygate prices settled back several cents, a marketer said. Temperatures will be a little above normal in the region over the next week or so, but he doesn’t anticipate an appreciable increase in demand. Eastern Canada also is mild with highs around 70 degrees recently, he noted. The marketer thus looks for a fairly “benign” market in the near term with prices not moving very far up or down from current levels.

It may have slipped some memories, but the official start of the 2004 Atlantic hurricane season is now just over two weeks away.

Despite the seeming reluctance of the South to experience its usual May prelude to hot summers, Weather 2000 says warmth, humidity and/or storms are contributing to a sultry May. The consulting firm’s Thursday advisory said that “as if not to leave anyone in suspense about the hot summer of 2004, May will continue to produce warmth and mugginess at an almost July-like pace for some sections of the nation. New York City had all of nine CDDs [cooling degree days] the entire month of May 2003. Yesterday [Wednesday] alone they tallied 11 CDDs. While super-late winter cool waves continue to enter the High Plains and spread over the Rockies and Northern Plains, warmth remains the main theme of 75% of the contiguous U.S. Such widespread warmth (especially impacting both coasts in the same month) hasn’t been witnessed in several years.”

Weather 2000 added that this “mugginess” is a very important issue (to the natural gas industry among others) for three reasons: “1.) The physical presence of high humidity levels keeps evenings quite warm, and the rate of cooling between 6 p.m. and midnight becomes very small. 2.) The effects of moisture flux and water vapor increases the heat index, making 10 CDDs feel as hot as 20 CDDs do on a dry day with a breeze. 3.) Hazy, hot, humid weather usually goes hand in hand with air stagnation and correspondingly health warnings about particulates, surface ozone and other harmful chemicals and allergens. Subsequently, time spent indoors to keep cool/healthy is increased, if not also mandated, for certain segments of the population.”

Kyle Cooper of Citigroup said his initial estimation for the next storage report looks for a build in the 90s Bcf range “and possibly higher.”

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