Sources agreed that Thursday’s 21.7-cent increase by June futures was the chief impetus for rising cash prices at most points Friday. The return of colder weather in upstate New York and New England, along with storage injection demand, also played a part in the overall firmness.
Flat to about 15 cents lower numbers at some points in the West and Midcontinent averted across the board gains. Otherwise, advances ranged from 2-3 cents to about 45 cents, with Rockies points garnering the lion’s share of gains above 30 cents.
Cooling load continued to recede in the eastern end of the South and even to disappear in some cases. Atlanta’s high was forecast to fall from 80 Friday to 75 Saturday, while temperatures in Charlotte, NC, were expected to peak around 67 Saturday. But lows in the 30s, with frost possible in some areas, were forecast for the upper Northeast.
Issues with excess supply were surfacing again in the West. SoCalGas was able to end a high-linepack OFO Saturday after recovering 120 MMcf/d of storage injection capacity, but PG&E replaced the SoCalGas OFO with one of its own (see Transportation Notes). Curiously, however, the PG&E citygate rose about 3 cents while the Southern California border continued to fall a little more than a nickel.
El Paso reported struggling with excess volumes on its system and said a Strained Operating Condition might need to be declared. Kern River said it had high linepack in the farthest upstream two (of four) system segments. The linepack problems on the upstream pipes prompted Las Vegas-based LDC Southwest Gas to issue a “hold to burn notice” and to caution customers that if they kept packing its system, an OFO might be necessary (see Transportation Notes).
It was mainly the futures strength from Thursday that rallied most of the cash market, a Northeast marketer asserted. He acknowledged there was some help from colder weather due in his region during the weekend, but he said temperatures should be warming back up again early this week. The Northeast market was “well balanced,” he said, enjoying advantageous basis spreads from Henry Hub.
In his understanding, the marketer continued, a couple of major buy stops got tripped around $7.80 at Nymex Thursday, which prompted a lot of short-covering by hedge funds and the June futures contract’s swing to a solid advance. It reminded him of an energy trader’s adage he’d heard: “It’s better to be long and wrong than to be short and fired.”
Calgary was still getting snow as recently as Thursday, said a producer based there. That’s not unusual, he said, because sometimes snow can go into late May in Calgary. In fact, he added, in his 25 years of living in the city, it has snowed at least once there in every month of the year, even August. “But we’re trying to get more spring-like,” he said.
The producer agreed that Thursday’s screen rise was primarily responsible for the physical market’s overall rise Friday. He trades NOVA Inventory Transfer (NIT), where prices were up about C20 cents.
The producer said Westcoast’s Pine River Gas Plant will go down for a plant turnaround lasting about a month in another couple of weeks. He estimated that will take about 310 MMcf/d off the market and said that should support Westcoast Station 2 pricing. A similar impact on NIT quotes is due next month, when several more plant turnarounds are scheduled.
Another Calgary producer affirmed that the city had seen light snow Thursday but said it went pretty quick and temperatures should be warming up over the weekend. He also attributed cash firmness to futures support. It’s not all that cold in Chicago, his main market, he said (the Windy City’s low was forecast at only 53 degrees Saturday). But storage buying there remains strong, which pushed the citygate more than a dime higher Friday. The producer said he has seen “a lot more demand at the Nicor gate” since the month started. That’s due to a rush to catch up on storage refills since Nicor doesn’t allow customer injections until May 1, he said.
Tim Evans of Citigroup estimates a 90 Bcf storage injection for the week ending May 4.
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