Moderate

Signifying moderate weather and lack of demand in the Golden State, Pacific Gas and Electric issued a systemwide Stage 2 high-inventory OFO on its California Gas Transmission system for Saturday. Penalties of $1/Dth were set for positive daily imbalances exceeding a 13% tolerance. Southern California Gas extended a high-linepack OFO that was implemented Friday through at least Saturday. SoCalGas had said it expected to have no more injection capacity in its storage fields as of Friday.

Despite a mid-term outlook for mostly moderate temperatures in nearly all regions and warnings of excess supplies at some locations in the West, cash prices were higher at most points Monday. A return of freezing lows in the Rockies after a relatively mild weekend, along with temperatures dipping into the 30s in both the Northeast and Midwest, got a modest amount of support from industrial demand returning from its typical weekend hiatus in boosting cash quotes.

Prices resumed a mostly moderate climb Monday after having last week’s four-day series of spikes interrupted Friday. Although cold weather was easing a bit after setting date-specific records for low temperatures over the weekend, there was still quite a bit of chill in northern forecasts to keep heating load fairly strong.

Who would have guessed? With weather fundamentals mostly moderate outside the Texas-desert Southwest area and starting to diminish in interior California, and futures guidance remaining quite negative after a 15.6-cent loss by the prompt-month contract a day earlier, cash prices sank again at nearly all points Wednesday.

The signs of growing cash market weakness that surfaced Tuesday were confirmed hugely Wednesday. Whereas only a moderate majority of points were slightly softer on the previous day, prices fell across the board Wednesday, with many of the losses reaching double digits.

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.

Rep. Rick Boucher of Virginia, one of the moderate Democrats on the House Energy and Commerce Committee who had several concerns with the climate change bill, Thursday said he will vote for the legislation in mark-up next week after reaching an accord with Committee Chairman Henry Waxman (D-CA) and Rep. Edward Markey (D-MA) on key matters.

Although the Northeast is due to continue seeing seasonally moderate weather Friday, there were enough gains in heating load in other areas to cause cash market gains across the board Thursday. The previous day’s 8.1-cent loss by May futures apparently was unable to impair the overall bullishness.

Milder weather trends in the East combined with already moderate conditions in most of the West to drag cash prices lower at a large majority of points Thursday. The gain of 8.4 cents by March futures a day earlier had little impact in averting softness in most of the cash market.