The dam burst on an already weakening cash market Friday. Following a record-high storage injection report and the screen’s plunge of just over 60 cents in response Thursday, nobody was surprised to see weekend numbers fall by anywhere from 40 cents to nearly 80 cents. Declines ranging from a little less than half a dollar to 60 cents dominated the market.

The whopper of an injection and accompanying extreme futures weakness obviously set the stage for Friday’s major softness in cash. But a couple of traders noted that other contributing factors included the typical load drop for a weekend and little change in generally unsupportive weather factors.

Some locations in the desert Southwest are starting to see daytime highs of 100 degrees or slightly more again, but that area and the lower reaches of the South continue to be the rare markets with substantial air conditioning load. Summertime conditions are still no-shows for much of the rest of the U.S. and Canada.

There’s just too much cool weather in the Midwest depressing current-burn demand, said a Midcontinent marketer. “It’s the same old, same old: trying to find a hole in the ground to stick the gas [storage] if you can’t find a home for it elsewhere,” he continued. Commenting on Nymex activity, the marketer said, “That EIA [report] sure scared a lot of longs out of the market.”

After spending the morning in the red, July futures recovered late for a daily gain just shy of 7 cents that was attributed to short-covering ahead of the weekend. The crude oil and heating oil contracts took big hits, however, that carried crude well below $31/bbl.

“It’s about time FGT [Florida Gas Transmission] quit these false alarms on Overage Alert Days,” said a Florida utility buyer after the pipeline followed through on Thursday’s advisory about a potential OAD notice by actually issuing one Friday (a few times earlier this spring FGT had warned of a “potential” notice without one materializing. It really wasn’t all that much hotter in Florida Friday than earlier in the week, the buyer said, quoting FGT Zone 3 down a little less than 50 cents to about $5.40.

The PG&E citygate and border-SoCalGas points recorded Friday’s biggest losses approaching 80 cents as oversupply threatened to overwhelm the Golden State again. After lifting Thursday’s high-linepack OFO Friday, PG&E issued a new one for Saturday (see Transportation Notes) and was joined by SoCalGas with an Overnominations Day declaration for Saturday. Although PG&E loosened its positive imbalance tolerance from zero to 4%, it raised non-compliance penalties from $1/Dth to $5.

Analyst Kyle Cooper of Citigroup said Friday his initial estimation for this week’s storage report “looks for a similar build” to the most recent one (125 Bcf), which would compare with a year-ago volume of 81 Bcf and a five-year average of 83 Bcf. “Temperatures alone would actually indicate a build slightly larger than last week. However, it is quite difficult to predict an increase, as physical constraints may come into play. However, the West definitely has additional injection capability…”

Cooper continued, “Obviously, injections will not continue at 125 per week. However, the temperature-adjusted implications of that injection do point toward much higher storage levels than previously considered. One week will not be the basis for a long-term projection. But it does indicate that prices above $6 will be very difficult to maintain without significant weather-related demand.”

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