Flat

A few flat to about a dime higher locations in the Rockies (and ANR ML7 in the Midwest) avoided mostly moderate softness in the rest of the market Wednesday. Some pullback in heat levels across the southern United States and Rockies, along with continuing mildness in the northern market areas, combined with the previous day’s 10.9-cent drop by August futures to depress most cash locations.

U.S. demand for fossil fuels — natural gas, oil and coal — will remain “exactly flat” to 2020, with only gas projected to grow at a rate of just 0.6% a year, according to a new report by McKinsey Global Institute (MGI).

Thursday’s increased strength in the cash market proved to be a portent of Friday’s trading, in which prices were flat or higher at nearly all points. It appeared that the supply squeeze from continuing major Gulf of Mexico (GOM) shut-ins and the reduced access to Rockies gas caused by the near-month-long outage of a Rockies Express segment was getting tighter in eastern markets.

Only a few flat Rockies points were left out of continuing gains in the rest of the cash market Wednesday. Initial evacuations of nonessential personnel were beginning at offshore installations as the expected path of Tropical Storm Gustav made it appear more likely that the storm will plow through the central Gulf of Mexico’s (GOM) production infrastructure.

Although flat to nearly 30 cents higher numbers continued in parts of the cash market Tuesday — primarily in the Midcontinent/Midwest, Southwest basins, California and the Pacific Northwest/Western Canada areas — most points were still in softening mode as cooling load remains fairly meager for what is often the hottest month of the year and prior-day screen guidance was negative again.

Mixed price movement returned to the market Monday — barely — following Friday’s all-points losses. But only a few locations managed to be flat to as much as about 19 cents higher as softness continued to dominate cash quotes. The 32.3-cent decline by September futures Friday, coupled with an overall dearth of major cooling load outside the interior West, kept prices falling at a large majority of points.

The breaking of a five-day losing streak by August futures Monday did essentially nothing to boost the cash market Tuesday. Four flat to about a dime higher points were the sole exceptions to overall softness. Quotes fell at most points despite forecasts of peak temperatures in the upper 80s or higher in much of the U.S. Wednesday.

Flat performances at the Southern California border and the Kern Delivery point in Arizona/Nevada were the only exceptions to cash prices continuing to rise across the board Tuesday. Forecasts of Wednesday lows in the 20s and 30s (and occasionally in the teens) from the Northeast through the Midwest and Upper Plains into the Rockies kept heating load at a relatively strong level for late March, and the cash market had extra support from the previous day’s 26.4-cent increase by April futures.

A drop of about a nickel at the PG&E citygate and flat Sumas numbers were the only exceptions to a continuation of rising prices throughout the spot market Wednesday. Although temperatures are fluctuating in some areas, this week’s cold wave in certain regions is proving to be more tenacious than the short-lived ones that dominated the first couple of months of 2008.