Cash prices made some effort at following the previous day’s gas futures market Wednesday, but it was rather half-hearted. Record crude numbers and a spike of nearly a quarter in July natural gas futures on Tuesday apparently made less impression on physical gas traders than somewhat weak fundamentals. Single-digit gains ruled as Wednesday’s quotes ranged from flat to barely more than a dime higher.

Cash firmness was not expected to last following massive retreats Wednesday among Nymex’s oil-related products. The July crude contract retraced Tuesday’s $2.45 climb back down almost to the penny Wednesday, losing $2.37 to settle a few cents below $40/bbl. Analysts said some of the supply fear premium in crude markets was erased when the United Arab Emirates announced it was bumping up exports by 400,000 bbl/d during June; that was in addition to an increase of 700,000 bbl/d already pledged by Saudi Arabia. Natural gas futures tagged along on oil’s slippery slope once again, dropping 16.2 cents.

Noting the relatively small advances in physical prices after one source had confidently predicted that Henry Hub would be up at least 20 cents Wednesday, a marketer said the response fell a little short in “following the screen” spikes of Tuesday. But he added that the cash market still moves generally in the same direction as futures on a day-delayed basis, so he expects Nymex’s retrenchment to be reflected in falling prices Thursday.

Air conditioning load is slowly growing across the southern U.S., especially from the desert Southwest through South Texas, where highs above 100 degrees are becoming common. But prices can’t count on much weather support otherwise. The key markets of the Midwest and Northeast currently are mild to downright cool, and their lack of demand was showing up in bearish feelings by at least a couple of sources.

A marketer said he was able to detect increased power generation load this week as Texas heats up, but added that utilities in the state had baseloaded a lot more gas for June than they did in May. Thus they were pretty well prepared for the growing heat, he said, and swing buying isn’t picking up as much as total load is. Katy continues to trade about 16 cents behind the screen, same as last week, he said.

A utility buyer in Florida said it was “more the humidity than the heat” that’s raising demand in the Sunshine State. Noting Florida Gas Transmission’s lowering the imbalance tolerance of an Overage Alert Day notice Wednesday to 15%, she commented: “When it was as loose as 25% previously, you had to wonder, ‘What’s the point?'” It doesn’t take much effort at all by shippers to stay within a 25% tolerance, she said.

Lehman Brothers analyst Thomas Driscoll anticipates a storage injection of 95 Bcf to be reported for the week ended May 28. This would compares to a 114 Bcf injection a year earlier. Citigroup’s Kyle Cooper said his final estimation for Thursday’s report is a build between 78 and 88 Bcf.

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