Maybe all it took was the beginning of spring to induce the first substantial market softness in more than a week. Lower industrial load over a weekend, a bit of moderation from cold weather in the Midwest and Northeast, and energy futures weakness the day before were the chief causes of across-the-board declines in spot prices Friday.

Losses ranged from about a nickel at some Midcontinent/Midwest points to 30 cents at the Southern California border. Most were in the teens.

Saturday was the official first day of spring, but it was hard for people in the Midwest and Northeast to tell without looking at a calendar. They were getting a respite Friday from snowy and frigid weather earlier in the week, and the melting of snow was expected to continue into Saturday. However, new cold fronts were due in both regions as the weekend went on, although these fronts were likely to be less severe than what preceded them.

It didn’t seem much like spring in the southern half of the West either, but for a quite different reason. According to The Weather Channel, temperatures will remain five to 25 degrees above average across much of that area into this week, and cities like Las Vegas and Phoenix were expected to set records for daily highs over the weekend. Although still chilly, only the Pacific Northwest was anywhere close to experiencing seasonal weather.

But the heat apparently failed to generate enough air conditioning load to boost prices. Instead, western quotes saw most of Friday’s biggest drops of 20 cents or more, principally due to high-linepack OFOs by both of California’s major LDCs (see Transportation Notes). The PG&E order carried a stringent positive imbalance tolerance of zero, while the one by SoCalGas was more lenient at 10% tolerance. Still, border deliveries into SoCalGas led the price trek downward.

The California market weakness was being felt in San Juan Basin and the Rockies, where a few pipelines continued to fret over excessive supplies. The only sign of a relaxation of high linepack came from Westcoast, which slightly eased its imbalance tolerance range to allow a modicum of packing again (see Transportation Notes).

“Prices dropped and dropped hard,” said a Southwest trader. “Swing gas is down 30 cents at the Southern California border. There’s so much news about bombings and unrest in the Middle East that we can hardly tell which price movement is due to which explosion.”

A source in the Texas market thought the weekend syndrome of lower demand was in evidence, saying, “People were almost trying to give gas away.” He said it would have been smart to try putting more gas into storage during the weekend if that was an open option. It depends on whether someone’s account requires yearly cycling in and out or allows leaving discretionary amounts in place, the trader said. He noted that the South Texas 2 and Comanche Peak 1 nuclear units will be coming down for scheduled maintenance this week, which could push intrastate Texas prices higher if the weather gets warm enough. The turnaround downtime is estimated at three weeks for the South Texas unit and about a month for the Comanche Peak unit, he said.

However, a Texas utility buyer said he was picking up a little spot gas every now and then just to give his gas-fired units a little exercise, but didn’t expect to see heavy air conditioning load until near the end of April.

Citigroup analyst Kyle Cooper said his initial estimation for the upcoming storage report “looks for a draw somewhere near 60 Bcf,” which “should certainly reduce the substantial surplus to last year and the three-year average, while it is possible that it slightly expands the deficit to the five-year average.”

©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.