To absolutely no one’s surprise, all points recorded major declines in swing trading for the weekend. Friday’s market had a lot going against it: the screen plunge a day earlier that was linked to the latest record-setting storage injection; the disappearance of very hot weather almost everywhere except for the desert Southwest and inland California; and the normal industrial load drop that accompanies a weekend.

The “smallest” drops were around a quarter, while the rest ranged as high as 60 cents or slightly more at a few Northeast citygates.

Chances are good for a moderate rally this week since hot weather is due to return to the northern market areas and last through the Independence Day weekend, one source said. However, due to lingering bearish psychology from the most recent storage report, he anticipates a pattern much like last week’s in which early strength yields quickly to softening, especially as the low-demand holiday period approaches.

The National Weather Service’s forecast for the June 30-July 4 period calls for above normal temperatures again throughout the Northeast and Midwest and extending south through the Mid-Atlantic to the northern edges of Arkansas, Mississippi, Alabama and Georgia. Another above normal outlook covers South and West Texas through New Mexico and Arizona. The Los Angeles-San Diego area of Southern California, along with the Pacific Northwest and northern Rockies, should see below normal readings, NWS said. Normal temperatures are predicted for other areas.

Citigroup analyst Kyle Cooper said his initial estimation for this week’s storage report “calls for a build well above 100 Bcf. There is quite a bit of uncertainty in [the] estimation as this is the first report with some heat in the major population centers.” His forecast compares with a year-ago injection of 68 Bcf and a five-year average of 77 Bcf. “A build of 103 Bcf would maintain the recent relationship to the five-year average,” Cooper continued. “We do think that injections will stay relatively large as initial A/C [air conditioning] load is met by more petroleum-fired [generating] units than in past years. At least for [last] week, a rather substantial amount of nuclear generation returned to the grid from the prior week.”

Despite an overall drop of about 30 cents Friday, Henry Hub was running strongly in late deals, a Gulf Coast trader said. “Someone was buying late, and lots of it was just one player, so we spent the morning selling it [Hub] and buying elsewhere.”

“Talk about feast or famine! Our load has been famine for a long while,” commented a Florida utility buyer who added that weekend rains would continue to keep the state’s power generation demand low. He said he had been selling some of his baseload gas “almost every day this month” rather than buying new supplies.

An eastern utility buyer expressed surprise that more people were “not stuffing the pipelines in order to get cash-out prices” that are significantly higher than end-of-month pricing. However, he guessed that “the pipelines know by now” how to combat that kind of gaming.

“It was probably one of our slowest days ever,” said a western marketer whose swing range at Malin was “only half a penny.” Bidweek numbers were essentially unchanged Friday following Thursday’s erosion associated with big futures weakness and the storage report, she said. She had been trading Malin for July in the mid $5.00s Wednesday, but said it got down to the low $4.90s Thursday and was “about the same” Friday.

El Paso-Permian dropped into the low to mid $4.60s in late swing trading when “some traders changed their plan and sold into the market not long after they had bought in,” a marketer reported. He added that “unless something comes up or blows up I’m done looking at July. It’s nice being flat and balanced.”

It’s a given that July indexes will be down quite a bit, since the July screen settlement of $5.291 was about 65 cents lower than the comparable June number. An end-user said he was happy to see monthly prices “going our way for once. However, they’re still not low enough for our industry [chemicals] to be profitable.” Two of his manufacturing plants in the South remain idled indefinitely due to lofty gas price levels.

A producer probably reflected the consensus in predicting that Monday’s bidweek activity “will be very weak. Only a few trades will happen. For the most part prices are done. We might see a few indexed deals, but only the occasional fixed price.”

A western utility buyer said the bidweek market was already starting to falter a bit before Thursday, “and then the EIA’s storage report pushed it down even further.”

Looking ahead, a Midcontinent-based marketer said, “I’m expecting prices to firm up a little this coming month. I’m not looking forward to it, though. I would like to see prices come down significantly, both from a personal and a business standpoint. Unfortunately the heat will come; it’s only a matter of time. At that point prices are going to stiffen. I just hope it’s later, not sooner, and that prices continue to ease down until then.”

The North’s “flirtation with heat ” was pleasant but short-lived, and of little net impact, according to an advisory Thursday from Weather 2000. The consulting firm continued, “Several locations throughout the Midwest and Northeast, which were still picking up HDDs [heating degree days] just a week ago, have finally experienced some summer-like heat this week. The critical mark of 90 degrees was finally reached by some northern hubs for a few days, but its bark was much worse than its bite. Troughs and frontal systems are already bringing an abrupt end to the heat over the Midwest and will reach the Northeast/Mid-Atlantic on Friday. When all is said and done, the heat will hardly make a dent on the cumulative or net temperatures for spring/summer ’03, essentially altering locations from having an extremely cool June to having a very cool June…

“Even with the strongest and longest sun of the year, solid ridging and subsidence, the ‘heat wave’ merely played a little catch-up. Now, instead of having zero days reaching 90, New York and Chicago will have three days, whereas they normally have four occurrences to date. Washington, DC, which should have hit 90 degrees eight times by now, will have had three days. Memphis will have had four days, but should have 16 90-degree days already. And guess how many days have broken 90 degrees in hot locales like Cincinnati, Charlotte and Atlanta? Three, six, nine? How about zero?And practically the entire U.S. from the Rockies to the Atlantic will end up with significantly below normal CDDs [cooling degree days].

“We remain confident and consistent with our original winter forecasts that July 2003 (approximately east of the Mississippi River) will qualitatively end up with similar temperate/cool results. CDDs will be below normal again, cool days will outnumber warm days, another “warm spell” will undoubtedly sprout up, but with critical day (i.e., >90 [degrees]) frequency remaining behind pace…[W]e do believe the central U.S. will witness a substantial turnaround. Following a very cool June, the regions between the Rockies and the Mississippi River will witness more cumulative heat as well as heat spikes. Depending on localized effects and moisture patterns, some central locations will end up with a hot July while others have a cool July.”

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