As a marketer had predicted the day before, cash prices dropped at nearly all points Friday. The softness was due to moderate weather conditions typical of a shoulder month being prevalent in most regions, Thursday’s nickel dip by May futures and the decline of industrial load during a weekend.

Western Canada’s NOVA Inventory Transfer and Westcoast Station 2 were the only locations to see small gains of a little less than a nickel. They were boosted both by forecasts of cold weather in the Pacific Northwest and by the Calgary area having low temperatures in the low teens accompanied by snow Friday, with similar conditions expected during the weekend.

Friday’s majority gains ranged from a couple of pennies to about a quarter.

Monday’s cash market will have prior trading day support from Friday’s 20.4-cent advance by May futures, which began the day in negative territory but once again were lifted by another record-setting spike by the crude oil contract, with crude traders reacting to news of attacks on Nigerian export pipelines.

After a chilly Friday, the western end of the South was due for a quick warm-up that would have Saturday highs at or near 80 degrees. However, any new cooling load being created there was offset by the cold front moving eastward, limiting highs in parts of the region’s central and eastern sections to the 60s.

Fairly mild temperatures were expected for much of the Midwest during the weekend, but a “backdoor cold front” would begin to move southward Saturday through eastern New England, according to The Weather Channel (TWC). “Somewhat cooler air will push all the way down to the Middle Atlantic region by Sunday,” the forecasting service said Friday.

Pacific Northwest points (Sumas, Kingsgate and Stanfield) saw only small declines because of what TWC called “downright COLD” wintry conditions accompanying “the passage of a vigorous cold front and a deep upper-level trough of low pressure” during the weekend. That may have been offset to some degree by Northwest Pipeline lifting a Stage II Overrun Entitlement for Receiving Parties north of Kemmerer Compressor Station that had been in effect since early April (see Transportation Notes).

In Thursday evening’s latest Rockies Express (REX) update on when the western segment will be operational all the way to a Panhandle Eastern interconnect in Missouri, the pipeline said the in-service date “is projected to be mid to late [this] week.” Although no REX index has been established since even the western segment has yet to be completed, the pipeline reported a sale to Tenaska Gas Storage of 15,000 Dth for Thursday flow at an even $9. That was higher than averages at other Rockies points that day.

Despite the seeming imminence of full REX-West operations, a Rockies marketer said he didn’t perceive any buzz of anticipation among the region’s traders. Because of the segment’s many delays, he said, some are still skeptical about this week’s supposed in-service date for deliveries all the way to Missouri and aren’t sure if it will add any further value to Rockies basis.

Rockies weather is finally getting more spring-like after freezing lows in Denver as recently as Thursday, the marketer continued. He thinks Friday’s futures strength will be able to rally most or all cash prices Monday.

One likely reason for a ho-hum attitude about the completion of REX-West possibly helping to boost Rockies prices (or not) is that the prices have already seen a substantial appreciation in value from REX service to interconnects with Northern Natural, ANR and NGPL already being in place, one source suggested. In the past two to three months the Rockies often have traded not far below Midcontinent numbers, he said. For example, Friday’s averages of $8.87-88 or so at Opal and Northwest-domestic were only about a nickel below quotes for CenterPoint East (although other Midcontinent points commanded greater premiums than that).

However, basis for futures pricing out of the Rockies is widening a bit, noted a producer in the region. And it’s no wonder, he said, “given the dismal performance of Kinder Morgan on this leg of REX,” referring to the many completion delays. “Who could ever think they’ll do any better on the next leg into Ohio?”

Also, Rockies gas demand usually drops by about 1.5 Bcf/d when spring arrives, the producer added. “This reduction in demand comes at a time when many of the regional pipelines are down for maintenance, particularly the El Paso and Questar lines, so it’s really quite common for prices to weaken during this period.”

A Midcontinent producer noted that it was still cool enough locally that he was “still running my furnace in the morning. But most pilot lights should go off this weekend.” His market attitude was growing more bearish, he said, because there is quite a bit of incremental gas coming onto the market and talk of a milder summer.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.