As could be expected following Thursday’s 36.8-cent drop by June futures prompted by a bearish storage report, cash numbers tumbled at nearly all points Friday.
Of course, the futures action wasn’t the only thing depressing the physical market. Prices had appeared to dismiss generally mild weather in rising for the most part earlier in the week, but the continuing lack of heating load could no longer be ignored, and the typical loss of industrial demand during a weekend was another bearish factor.
Flat numbers at the Florida citygate were the sole exception to double-digit losses ranging from about a quarter to around 45 cents. Declines were fairly evenly spread across geographic market areas.
Forecasts of high temperatures from the upper 70s to the mid 80s across the southern U.S. appeared to be producing some air conditioning load, but it obviously wasn’t enough to arrest price softness. Otherwise cool-to-mild conditions were due to prevail in most areas, with even the Rockies and Western Canada staying comfortably above freezing.
Cash prices had tremendously negative guidance from Thursday’s 36.8-cent descent by June futures, but appeared to be getting modest support from Nymex action during most of Friday morning’s session before the prompt-month contract turned 6 cents lower on the day (see related story).
Although SoCalGas did not extend Wednesday’s high-linepack OFO through Thursday, it issued another one for Saturday but delayed its announcement until Friday afternoon. Cash trading had already been completed by then, but traders apparently were anticipating the OFO in sending both the SoCal citygate and Southern California border slightly more than 30 cents lower.
There’s just “too much gas [supply],” a Rockies producer said in explaining Friday’s major price weakness. Rockies production had gotten a little bit of price relief from the Kern River expansion going into effect recently, “but not much,” he said. Even though it didn’t translate into a firmer market, the Denver area was still getting a little bit of snow for a second day Friday, the producer added.
A Midcontinent producer cited President Obama’s declaring a moratorium on Gulf of Mexico drilling following the disastrous oil leak from a sunken rig off the southeast Louisiana coast in predicting higher daily gas prices Monday. “Also, storage operators will continue to fill as rapidly as they can (evident by last week’s 83 Bcf build), so this should help keep prices up,” he said.
The producer expected first-of-month May indexes in the Midcontinent to be 30-40 cents above April levels.
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