After futures had plunged 35.4 cents a day earlier, it was virtually inevitable that cash numbers fell at nearly all points Thursday. Some cooling load will be returning in the South Friday after a midweek cooldown, but the contribution to gas demand will be meager for the most part and overall weather fundamentals remain weak going into the weekend.

A few flat to about a dime higher quotes in the Permian and San Juan basins were the exceptions to general losses ranging from a couple of pennies to about 30 cents. Most of the largest drops were at Midwest citygates, where conditions are becoming pleasant again after a short period of chill, and Northeast citygates, where temperatures will be falling but only to cool levels.

The Energy Information Administration handily exceeded consensus expectations in the mid 110s Bcf when it reported a 124 Bcf storage injection for the week ending May 29. July gas futures, which had been wavering on either side of flat prior to the report, made the predictably bearish response shortly afterward but rallied on the coattails of petroleum product strength at Nymex to close the day up 4.4 cents (see related story).

The small futures rebound was not expected to boost the cash market Friday as weather-based load remains largely missing in action and the weekend decline of industrial demand will come into play. Also, it was believed that the storage report’s negative implications probably would resonate more with cash traders Friday than they did with Nymex natural gas traders caught up in the strength of crude oil Thursday.

After a retreat of highs into the 70s Thursday in much of the central and eastern sections of the South, that area will be returning to the 80s Friday, which is hardly enough to induce much power generation load for cooling. On the other hand, Texas rising into the low to mid 90s likely will have a lot of air conditioners humming. But although West Texas numbers were flat to barely higher from the intrastate demand, the Houston Ship Channel and Katy saw significant losses.

Otherwise, temperatures are expected to remain mild to cool in most areas, with even the desert Southwest reining in previous highs in the low 100s to the mid 90s Friday. One patch of heating load remains in Western Canada, where Calgary and Edmonton were predicted to bottom out in the 30s Friday.

Excess supply issues in the West continued to lighten as PG&E will end Friday a systemwide high-inventory OFO that had been in effect since Tuesday. But Westcoast said its linepack remained above target levels.

It seems storage and weather fundamentals are becoming more bearish, said a Gulf Coast trader. She thought it “interesting” that despite the storage build being significantly higher than expected and gas futures falling as much as about 20 cents soon after the inventory report, the gas screen was able to rebound based on the oil strength.

All of the near-term and intermediate-term weather forecasts are pretty mild except in the Southeast, where it looks like summertime heat is getting near, the trader said. Even with the cash declines over the past couple of days, she thinks prices “should be even weaker than they are.”

“What are we going to do in a couple of months” when there will be few storage injection options left? the trader asked. She is afraid that some producers seem to ignore reality in not facing up to the fact that summer heat probably will be unable to avert a near-total storage refill even earlier than usual this year. One big marketing company has told her it’s expecting $2.80s Henry Hub prices in the fall, she said.

A utility buyer in the South said his area is warming again, but “it’s still not very hot” compared to normal summer conditions. His company is still waiting for some really substantial cooling load to come along, he said. The utility is not “crowding” its storage account yet, and hopes to stay on its prearranged injection schedule, he said.

The intermediate-term weather picture should be growing more bearish in the North and more bullish in the South late next week. In its six- to 10-day forecast posted Wednesday afternoon for the June 9-13 period, the National Weather Service (NWS) calls for below-normal temperatures from New England to the Mid-Atlantic westward through the Midwest and upper Southeast/Midcontinent to western Montana and the Rockies before sweeping to the southwest into the southern two-thirds of California. In early June that essentially means modest heating load and almost no cooling demand in the affected area. On the other hand, the NWS prediction of above-normal readings from Florida through the southern end of South Carolina and along the Gulf Coast states as far west as southeastern New Mexico could provide a boost in air conditioning load.

After Tropical Depression One failed to become a named storm late last week, the Atlantic tropical scene remained quiet Thursday, the National Hurricane Center reported.

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