Extra

With a little extra push from the previous day’s prompt-month futures decline of 6.9 cents, the cash market finally acknowledged Wednesday that based on generally subpar cooling load in many areas, its moderate strength in the first two days of the week had largely been defying the law of price gravity.

As expected, the combination of generally light weather-based demand, further futures softness a day earlier and the extra loss of load associated with a long holiday weekend resulted in lower prices at virtually all points Thursday. Forecasts of mid 90s to 100-degree highs in the south-central U.S. and a warming trend to either side of 80 in the Midwest failed to increase cooling load enough to support the cash market.

As a marketer had anticipated a day earlier, cash prices capped a week of solid advances Friday by recording increases throughout the market. A bit of extra chill was due in the Midwest and Rockies over the weekend, but otherwise forecasts remained about as benign for gas demand as they were earlier in the week. Industrial load’s weekend decline obviously had little impact.

Southwestern Energy Co. has upped its capital spending for 2008 to $1.7 billion from $1.46 billion, with most of the extra funding to be directed at its core leasehold, the Fayetteville Shale. The Houston-based independent also closed its sale of some noncore properties in the Arkansas shale to XTO Energy Corp. (see Daily GPI, April 4). The $518 million in proceeds is expected to fund the higher spending plan this year. Of the $245 million increase in planned capital investments, $153 million is dedicated to the Fayetteville Shale. The company now expects to participate in around 520 wells this year (75% operated), up from a previous guidance of 475 wells. About $30 million of the new capital is slated for more exploration in East Texas, $34 million is for gathering systems for the midstream operations and $28 million is for other projects. Southwestern also has increased its 2008 production guidance to 172 Bcfe from a previous forecast of 168 Bcfe, which would be 50% above its total 2007 production.

As expected, spot prices fell at most points Wednesday under the weight of prior-day futures weakness, the extra decline of industrial load during a four-day holiday weekend and only moderate heating load going into the weekend in such areas as the Northeast and South.

As expected, forecasts of moderate weather in most of the East, Pacific Northwest and West Coast along with the extra loss of industrial demand that accompanies a holiday weekend caused prices to range from flat to nearly 35 cents lower at most points Friday. Several scattered gains of up to about C15 cents kept mixed price movement in play as many traders made the customary early holiday-related exits from their offices.

With the start of another week of what promises to be widespread extra-hot weather combining with last week’s futures rally being extended by another 23.4 cents Friday, it was hardly surprising that cash prices were up strongly Monday at most points. Further stirrings of tropical activity in the Atlantic, including the formation of Tropical Depression 4, and the return of industrial load from its usual weekend hiatus also lent strength to the cash market.

With midweek heat staying fairly strong in nearly all areas — especially the West — and with extra support from a prior-day screen spike of nearly half a dollar, cash quotes again rose by sizeable double-digit amounts at all points Tuesday.

Prices were up at nearly all points Wednesday as heat levels were on the rise in some areas, spurring extra power generation demand to keep air conditioners humming.