A prior-day futures decline of 15.9 cents and a general lack of heating load that so far is being replaced with only a moderate amount of cooling load resulted in falling cash prices at nearly all points Tuesday.
Mild firmness in the San Juan Basin and a couple of flat points elsewhere were the exceptions to drops ranging from a little more than a nickel to 80 cents or so. Even with excess supply situations fading further, the Rockies repeated as the market area with the greatest price weakness, although its drops were less than on Monday in most case. Losses in the teens or 20s dominated in other regions.
Growing heat levels may allow a rally at some time in the next few days. Some sections of the northern U.S. are starting to join the nation’s southern half in seeing high temperatures in the 80s, while a few others are expected to approach the 80-degree level Wednesday. The desert Southwest has begun experiencing near-summer heat, with Phoenix forecast to hit 97 Wednesday.
However, prices will again have negative screen guidance to deal with Wednesday after June natural gas fell 14.2 cents to $7.637 Tuesday despite strength in Nymex’s petroleum product offerings.
The start of the 2007 Atlantic hurricane season is still about three weeks away, but there is already a subtropical storm off the South Atlantic coast. Any impact on the gas market — other than to cool off coastal sections of the South Atlantic states (thus dampening developing power generation demand for air conditioning) — is unlikely, as the storm “is forecast to simply linger off the coast with some slight westward movement toward the Georgia coast,” according to The Weather Channel. “The current forecast calls for the storm to gradually weaken just off the Georgia/South Carolina coast during the next 36 to 48 hours. There is an outside shot of the subtropical storm transitioning to a tropical cyclone.”
The Rockies still had a little cold weather to support regional pricing last week, but that is almost gone as Denver is expected to peak in the low to mid 70s Wednesday. Issues with excess supply also are continuing to recede, as Kern River reported normal linepack systemwide Tuesday and Southwest Gas said it canceled a “hold to burn notice” Monday after El Paso reported that the possibility of a Strained Operating Notice declaration had faded after high-linepack problems had disappeared over the weekend.
Southern California Gas regained an estimated 75 MMcf/d of storage injection capacity with the end of maintenance at its Playa del Rey facility.
It’s getting warm out there, said a marketer in the Upper Midwest, but she could detect little local air conditioning load at this point. And thundershowers will cool things off again pretty soon, she added. She noted that Consumers Energy had fallen nearly a dime below its first-of-month index with quotes in the low $7.60s.
The West is divided primarily along the lines of a hot Southwest and a cool Pacific Northwest, commented a trader in the region. However, inland California is heating up, he added, so that should put a floor underneath any further price losses in the Golden State. There’s a fair amount of power generation load for gas in the West for now because maintenance has several power plants off-line, but that will not last long as weather should start moderating again soon except in the Southwest, he said.
At a time when above-normal temperatures start to mean something in cooling load, the National Weather Service expects there to be plenty to go around next week. In its six- to 10-day forecast for the May 14-18 workweek, the federal agency forecasts above-normal conditions throughout the U.S. with these exceptions: a wide north-south coastal strip in the West Coast states; the southwestern corner of Louisiana along with nearly all of Texas except the Panhandle; the southern half of the Florida peninsula; and all of the Northeast, coastal sections of the Mid-Atlantic and the northern edge of the Midwest. NWS predicts below-normal readings only in South Texas and in most of the Northeast except for western Pennsylvania and western New York.
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