Cash prices began what could be an extended period of softening through the end of May with across the board declines Tuesday that were fairly substantial in ranging from a little less than a dime to nearly a quarter. Most of the larger losses were recorded in the West.

Widespread mild temperatures are expected to stick around for a while longer, and Monday’s stall of upward momentum in gas futures was resolved into a 27-cent screen dive Tuesday, which indicated that softer cash prices may not be reversed in the next few days. In fact, prices also plunged throughout the crude oil products lineup at Nymex, with crude dropping just over a dollar to $40.54/bbl on what was described as profit-taking. However, the oil weakening is likely to be only temporary as the supply/demand dynamics in that area remain supportive of high prices.

Whereas the first two-thirds of the May aftermarket was strong overall, it’s looking increasingly like the rest of the month will be weaker. A utility reported doing a balance-of-the-month deal in the Rockies market Tuesday that reflected a discount of a little more than a dime under the average of next-day flows.

Despite generally weak current influences on the cash market, air conditioning load appears to be spreading a bit from its traditional mid-spring haunts in the desert Southwest. The Weather Channel said high temperatures approaching the 100-degree level would be experienced Wednesday in western portions of Oklahoma and Texas, although the South is expected to remain fairly moderate.

An Overage Alert Day notice by Florida Gas Transmission Monday had little market impact then because of the notice’s quite lenient 25% imbalance tolerance, and its removal Tuesday was much the same, as production-area price movement on FGT jibed with the general Gulf Coast market trend both days.

Prices were “a little softer for us” Tuesday, a utility buyer in the Lower Midwest said. Of course, “a little softer” is extremely relative when numbers are still near the $6 level, he added. A rally could be in the cards before the month ends, the buyer said, but he expected nothing but more cash softness in light of the huge weakness in the Nymex energy complex.

A marketer in the Upper Midwest also noted the screen’s fall of more than a quarter, “which is good for us.” That and little weather load should keep prices going lower, she said, citing area weather that was dry (following a lengthy wet period) and in the upper 60s.

Malin and the PG&E citygate recorded the day’s top declines (by a hair); the utility did not issue an OFO, but projected that its linepack might start to exceed maximum target levels before the end of the week.

A Northeast utility buyer said he was doing “mainly market-area stuff for now,” laying off production-area purchases. “We’re not buying any system gas right now, but are waiting to see where prices go,” he added.

Chances are good for a sizeable increase in cooling load in the South next week. The National Weather Service forecast for the May 24-28 workweek sees above normal temperatures everywhere south and east of a line running from southwestern New Mexico through the southern end of New Jersey. It expects below normal readings everywhere north and west of a line from Southern California through northern Wisconsin, excluding Washington state and northern Oregon.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.