Spots cash prices played catch-up with the screen in Friday’s trading. The average overall loss was 34 cents, and all actively traded points endured declines in the 30-cent area. Traders see the highs for the year in place and see mounting fundamental pressure on prices in the spring and summer. At the close of futures trading, June had risen 1.6 cents to $4.041 and July also had gained 1.6 cents to $4.093. June crude oil, aided by a supportive employment report, gained $1.62 to $95.61/bbl.

A Rocky Mountain producer is not optimistic that there will be much price support from what he sees as a very bearish injection outlook. “Prices are determined by the change relative to year-ago storage levels, not the five-year average, and we have a miserable summer on tap. “I’ve got numbers going back from early May last year to early September, and it shows how little gas we injected because of all the coal-to-gas switching, plus we had a hot summer.

“We’ve got to have some way for coal and gas prices to converge, or we are going to get killed by the power sector. [Also] production is not dropping. EIA [Energy Information Administration] says production is up 2% from last year. Well, 2% is 1.2 Bcf/d, so all these guys that say production is flat, it’s rolling over, are dreaming. It probably won’t be as hot as it was last year, and we are starting off here in May and it is cool in Texas. It’s the most important state for gas use for air-conditioning load. We are in for a rough stretch here,” he said.

Quotes in the Rocky Mountains for weekend and Monday gas fell about in line with the national average. At the Cheyenne Hub, deliveries fell 37 cents to $3.78, and on CIG Mainline prices were seen at $3.75, down 33 cents. At Opal, weekend and Monday packages came in at $3.78, 36 cents lower, and on Northwest Pipeline, Wyoming packages changed hands at $3.71, 35 cents lower.

A moderating temperature regime on the West Coast had no impact on weekend and Monday gas deliveries at major trading points. Prices still tumbled at about the same rate as the national decline. forecast that Los Angeles’ high of 89 Friday would fall to 76 Saturday and 72 on Monday. The normal high in Los Angeles this time of year is 74. In San Diego, Friday’s high of 84 was predicted to fall to 69 on Saturday and 69 on Monday. The seasonal high in San Diego is 68.

Quotes at the PG&E Citygate skidded 32 cents to $4.08, and weekend and Monday deliveries to the SoCal Citygates dropped 30 cents to $4.21. At the SoCal Border packages were seen at $3.99, 34 cents lower, and on El Paso S Mainline weekend and Monday gas came in at $4.07, down 33 cents.

Other trading centers weakened as well. The Henry Hub retreated 31 cents to $3.97, and gas at Tetco M-3 fell 36 cents to $4.04. Deliveries at the Chicago Citygates tumbled 39 cents to $4.02, and on Dominion weekend and Monday gas shed 41 cents to $3.86.

Futures traders are not optimistic either that prices can make any sustained improvement. “I’m not convinced that there is upside potential here,” said a New York floor trader. In his view, prices were building a base, “but it’s a weak base. I’m thinking prices are not going to hold here, and I would be inclined to sell rallies rather than buy dips.

“Once prices break below the $3.96 to $3.98 area, that will be the key for a general bailout. We are going into open-window weather, and I don’t see any reason for the market to work higher.”

Thursday’s sharp decline did a lot of damage to the technical outlook. Instead of attempting to estimate upside objectives, analysts are now seeking to determine market support. “The question now: where is support?” said Brian LaRose of United ICAP “[We] Peg $3.891-3.850 as the lowest levels consistent with any wave ‘four’ correction in a continuing five-wave move up from $3.050. Peg $3.577-3.400 as the lowest levels consistent with any wave ‘B’ correction in a continuing ABC up from $3.050. He said that should the market undergo an “average seasonal decline,” prices would slide to $2.879.

Top traders see a volatile market and suggest a sidelines position. “While [last] week’s price failure off of the April highs has reinforced our expectation for price consolidation within the $4.00-4.30 zone, we also feel that this market will be spending much more time near the low side of these parameters than toward the high side,” said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients. He said he has “some difficulty constructing a pricing scenario capable of sustaining a sub-$4 price environment in nearby futures” and also believes “that piecing together a meaningful price advance amidst limited guidance from the weather will prove difficult, especially now that the coal-to-gas substitution factor is being more vividly displayed.

“While we still view production as deserving of a bullish check mark, it is also a slow mover that is extremely difficult to define with accuracy on a current basis. All in all, we are maintaining a neutral trading bias in anticipation of wide price swings that will generally be developing north of the $4 mark per nearby futures, in our view. But at the same time, we still see long winter-short summer spreads as providing a good bearish proxy for an outright short position. Any holdings such as long January 2014-short July 2013 futures would represent a hold.”

In its six- to 10-day outlook WSI Corp. said, “Temperatures are a touch warmer over the Northeast late in the period.” The forecaster showed above-normal temperatures within a broad ridge extending from New England southwest to Ohio and West Virginia. The Great Basin and Pacific Northwest are also expected to be above normal.

The Labor Department reported that non-farm payrolls increased by 165,000 in April, modestly above expectations, and the unemployment rate held steady at 7.5%.

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