Several flat points in the East were included in an overall softer cash market Tuesday. Prices were pressured lower by weak weather demand throughout virtually the entire market, a 9-cent screen drop the day before and the continuation of a bearish storage mentality.
The declines ranged from a couple of pennies to more than 50 cents, although only one point fell more than a quarter. The largest ones of about a dime or more were concentrated at western points and Northeast citygates.
No new OFOs were issued, but the West was plagued by excess supply that found it difficult to find a market home, typified by high linepack reports on Kern River and Westcoast. Low-end quotes on Questar and Northwest South of Green River dropped below $5, possibly due to Northwest’s warning Monday of a potential OFO due to excessive nominations through its Vernal (UT) Compressor Station (see Daily GPI, May 17).
There’s little prospect of a near-term rally despite a moderate upturn in energy futures, according to one source. Even with cooler temperatures in store in the Midwest and Northeast, the incremental increase in heating load should be both very small and short-lived, he said. And although highs will remain in the 80s for much of the Southeast, that hasn’t seen any appreciable increase from last week and is slightly subnormal for the region in the last half of May, he said.
Meanwhile, the West was losing nearly all of any heating load it had in recent days. About the only cold weather left Wednesday will be in the upper levels of the Cascade Mountains, The Weather Channel said.
A Midwest marketer confirmed that a cooling trend was fairly insubstantial for gas prices. “It’s cool again and due to get a little cooler,” she said, but the lower temperatures would not raise Midwest heating load to much extent. With it getting into late May, highs should be in the 70s by now, but right now they are only reaching the 60s. However, the region should start seeing the 70s before the weekend, she added.
The marketer said her company was only trading small volumes each day because it went slightly long on May baseload.
A Gulf Coast producer said things have been pretty quiet in the both the term and daily markets recently. He thinks the oil product inventory statistics coming out Wednesday morning will have a lot to do with pointing out the near-term direction for gas prices because gas and oil markets have had “a pretty good degree of correlation” in recent months, although there are occasional aberrations.
The outlook for the May 23-27 workweek is decidedly split on an East-West basis, according to the National Weather Service (NWS). Except for normal conditions in the northern end of Maine, it predicts below normal temperatures everywhere east of a line from the North Dakota-Minnesota border through the Midcontinent into South Texas. On the other side of the national coin, the NWS six- to 10-day forecast calls for above normal readings everywhere west of a line from eastern Montana to the New Mexico-Texas border.
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