Reacting to large drops in energy futures the day before and finding little support from weather-related demand, cash prices fell by double-digit amounts at all points Wednesday. The declines ranged from a little more than a dime to about 35 cents, with all but a few hitting 20 cents or more.

More softness is expected Thursday following another dime-plus drop by May natural gas futures and with the modest amount of heating load existing in the Northeast due to depart shortly. As analysts had predicted (see Daily GPI, April 13), it didn’t take long for the screen to fall below the psychologically important $7 level. And Nymex’s petroleum-related offerings again were extremely weak, with crude oil plunging more than a dollar and a half and coming to rest not far above $50/bbl after reports showing further increases in crude and unleaded gasoline inventories, although distillates (which include heating oil) recorded a decline.

Most points began the week below first-of-month indexes, but Tuesday’s rally had boosted most back to flat or moderately higher than index. The sharp reversal on Wednesday left a majority of points at discounts to index again. Most of the ones that were still trading above bidweek levels Wednesday were in the West.

“It seems like gas is tracking the oil market a lot lately,” commented a Gulf Coast producer. He noted that Henry Hub traded only a few cents above the screen during morning business, which represented a considerable tightening of the Hub premium from Tuesday. Gulf Coast fundamentals remain quite weak, he said, and weather demand will be light until southern heat starts kicking in more strongly. The only chance he saw for a rally in the next week or so is if the market sees good buying opportunity from falling prices, but the producer didn’t expect one unless something happens to make oil prices spike.

Intrastate Texas load is still light, since little of the state is experiencing highs above the 70s. “It actually felt kind of cool at times,” said a Dallas-area marketer.

Although prices were down, the Northeast market was showing some resilience as both LDCs and power generators continued to buy fairly substantial amounts because regional weather is unseasonably cool for now, a marketer said. However, temperatures will be moderating by the weekend, he noted. Between that and the screen moving lower, he looks for continued cash softening but no major plunges.

The National Weather Service’s outlook for the April 18-22 workweek calls for above normal temperatures everywhere north and east of a line that runs westward from the southern edge of North Carolina through the middle of Oklahoma and the Texas Panhandle before curving to the northwest through Colorado and Wyoming into western Montana. Peninsular Florida is the only area where the federal agency predicts below normal readings.

Expectations for Thursday’s storage report tend to center around an injection of 40 Bcf, although prior guess range as low as a little more than 20 Bcf.

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