With bearish weather and storage outlooks little changed Wednesday from the day before, some traders were a bit surprised to see Tuesday’s hemorrhaging of spot prices come to a halt so soon for the most part. But they cited further buying for storage injections and the probability of power generation maintenance shifting load to gas peaking units as reasons for the rebounds.

A few scattered points continued to move lower Wednesday, but the market was dominated by flat to moderately higher numbers. Gains ran as high as about 15 cents, with the Midcontinent and Northeast seeing most of the larger advances.

Although mild spring conditions will still pervade most market areas Thursday, a couple of temperature swings in both directions are due that could have accounted for at least a modest increase in weather-related load. According to The Weather Channel, a slow-moving cold front in the Northeast will result in highs in the 40s and 50s in New York and New England, with wet snow likely in upper Maine. And the western climate was expected to range from mountain snows in several areas to thermometer readings in the 90s for a section of the desert Southwest. Meanwhile, Florida is getting warm enough to prompt an Overage Alert Day notice by Florida Gas Transmission (see Transportation Notes).

“I don’t know that I’d say storage buying” was the main reason” for Wednesday’s generally modest rebounds, said a Gulf Coast marketer, but it probably played some part. He felt that another factor likely was people covering short supply positions left over from bidweek. However, he noted that “applying logic to an illogical market” hasn’t been very successful in recent years, so it was difficult to pinpoint the exact cause of Wednesday’s overall price firmness.

As of Tuesday prices had seemed poised to get back down near index levels Wednesday, the marketer pointed out, but the mini-rally put that off at least temporarily. Thursday’s market direction was a tough call after futures wavered on either side of flat Wednesday, he said. (A few points were flat to slightly under first-of-month indexes Wednesday, but the great majority ranged from about a nickel to a little more than a quarter above index.)

A Northeast utility buyer thought storage injection purchases by his own company and others was the primary impetus for prices making a modest rally. “Our plan is to inject a heck of a lot during April,” he said. But the company also will spread injections out throughout the summer because the Nymex strip might not stay in its current pattern of stair-stepping higher each succeeding month, he added. Also, some storage operators such as Columbia Gas, where he has service, require fairly stable rates of injection over the course of the injection season, the buyer noted. About prospects for a very hot summer, he said he was “kind of jaded about all the various forecasts” and not sure which ones to believe.

For a producer, the matter was simple: “Look at the screen and it’s the right time to inject.” However, she also said she was selling gas to some Gulf Coast generators that normally aren’t running gas-fired plants in April, “but they’re buying for current burns.” She suspected that there had to be a substantive amount of maintenance on nuclear and/or coal facilities going on that is shifting generation load over to gas peaking units. The generators are usually doing their deals fairly late in the morning because they have to get their power load arrangements set up first, the producer observed. She reported hearing of one weather service that is calling for a warmer than usual May through July period, then a normal August. And even a “normal” August is pretty darn hot in the Gulf Coast, she laughed.

©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.