Exception

Nearly all the key economic barometers for natural gas markets are expected to continue heading south this year, with the exception of Gulf of Mexico (GOM) gas production, U.S. imports of liquefied natural gas (LNG) and the level of working gas inventory, the Energy Information Administration (EIA) said in its Short-Term Energy Outlook for May.

With the exception of drops at several western points, a majority of the cash market extended Monday’s rally into Tuesday. Some heating load in northern market areas, a modicum of cooling demand from the South through Southern California and the previous day’s 15.3-cent rebound by November futures supported prices at most points.

The return of cold weather and prior-day screen support combined to keep prices rising at nearly all points Wednesday, but with the exception of the Northeast, the gains were considerably smaller than Tuesday’s in most cases. Production-area receipts into Columbia Gulf were suspended following a tornado-caused explosion Tuesday night at a Tennessee compressor station (see related story).

A flat ANR ML-7 was the sole exception to rising cash prices Tuesday. The market was able to continue this week’s overall rally so far despite support from weather fundamentals getting even weaker and neutral screen guidance from Monday. However, one source speculated that last week’s softness late in the week may be drawing out storage buying bargain-hunters and possibly some fuel switchers now that prices are considerably lower than earlier this year.

A flat Waha was the sole exception to continued price increases Friday. Eastern quotes especially saw strong gains as spreading hot weather that promises to stick around for a while raised power generation demand at a time when gas is competitively priced against other fuels. A 61.7-cent screen spike on the day before contributed extra support to the cash market.

With the exception of several scattered flat to lower points that were concentrated in the Midwest and Louisiana, prices continued to rise at a large majority of points Tuesday.

With the exception of 2002, U.S. gas demand has been flat over the last five years because of limited supply growth, but going forward demand growth will be limited not only by supply but also by conservation in the residential and commercial sectors, demand destruction in the industrial sector and fuel switching in the electric sector, all because of high prices, consulting firm Energy Ventures Analysis (EVA) said in its latest Fuelcast outlook.

Texas Eastern said Friday afternoon its Main Pass pipeline system had become operational again, with the exception of the Apache-operated Main Pass 7 meter. “At this time wellhead and platform communications are still out for most of the system. Therefore, as production is being restored and before communication links are reestablished, TE requires point operators to notify their operations account manager or Texas Eastern Gas Control (800-231-7794) that their meters are flowing so nominations can be confirmed.” Along with Main Pass 7, South Pass system platforms and the onshore Venice (LA) Plant will remain shut in until further notice, Texas Eastern said.

A generally quiet market week came to a close Friday with anticipated softening at virtually all points (a flat Westcoast Station 2 was the exception). The lack of significant heating load in all market areas, the previous day’s bearish storage report and its accompanying screen loss of 22.7 cents, all played a part, with the usual weekend reduction in industrial load in a minor role.