Seeing little in the way of new fundamental influences and getting only a late nudge downward from the storage report, the cash market generally marked time Thursday. Nearly all points were about a dime or less up or down from flat, with moderate gains in the majority. Upticks of 20 cents or more in quotes for San Juan Basin and Northwest (South of Green River) were the major outliers from the overall market.

However, all the ingredients are in place for a recipe of softening prices Friday, sources said. The demand slump of a holiday weekend will play an obvious role, and that will be compounded by forecasts of generally moderate weather for most regions outside the scorching Southwest (date-specific record highs there are possible through Friday, according to The Weather Channel). But the most bearish impetus probably derives from the Energy Information Administration’s report of 90 Bcf injected into storage last week, and the screen’s ensuing decline of more than 16 cents on the day. (Crude oil futures were higher during the morning based on news of the U.N. voting to lift sanctions against Iraq, potentially paving the way for faster recovery of that country’s oil-exporting capability; however, crude eventually finished in the red also.)

The 90 Bcf storage pull tended to exceed most prior guesses, but a Texas-based marketer said the volume was “kind of expected, even though Nymex took a big dive afterward.” She and others reported falling prices in the relative handful of swing deals left to be completed after the report, “which was good for us because we had to make a late [Transwestern West Texas] purchase and got it at $5.60. People tried to sell to us earlier in the low $5.70s, but I told them that wouldn’t work with my Waha numbers.”

Air conditioning load is slowly starting to build again in parts of the South that weren’t under flood watches Thursday, but it has yet to reach levels that would seriously clash with storage needs. A Northeast trader commented that most gas must be “going into storage currently” because that’s about the only thing he could see that kept prices from crashing this week. There’s almost no heating load in the region, he said, and power plants are being turned off “because the spark spreads are gone.”

A New England utility buyer begged to differ a bit, though. “It’s still getting kind of chilly overnight, and we still have a few furnaces being turned on (such as mine last night).” Conditions are expected to stay similar weather through Tuesday, she added, lamenting, “Are we ever going to get out of this winter?”

Temperatures were actually relatively cool in the Dallas-Fort Worth area Thursday, confounding the local forecast, one source said. The Texas utilities were still buying fairly strongly, though, presumably for storage injections, she said. That helped buoy Permian Basin/Waha numbers, which also got extra support from El Paso’s continuance of an Unauthorized Overpull Penalty situation (see Daily GPI, May 22), the source added. The El Paso constraint, coupled with ongoing maintenance on Transwestern’s San Juan Lateral, undoubtedly contributed to San Juan prices seeing one of the day’s biggest gains, she said.

Sonat reminded shippers that the Memorial Day weekend is typically a low-demand period on its system, and that they should be alert for the possibility of an OFO.

There has been no change in status for ExxonMobil’s Katy processing plant, which is still offline after being shut down due to a fire last week (see Daily GPI, May 19), a company spokesman said Thursday. The economics of restarting the plant are being evaluated, he said, but there’s no telling when a decision might be made. Plant volumes had been declining for a while and were down to about 120 MMcf/d when the fire occurred, he added.

June business is making a small stir. One source reported Chicago citygates being done at index minus 2-1 cents, and at physical basis of plus 2-3 cents. Other last-day Nymex basis quotes included Florida Gas Transmission Zone 1 at minus 2 cents and Texas Eastern M-3 at plus 41-42 cents.

A marketer observed that May was “another month where you got burned if you didn’t buy your baseload” and instead rode the swing market, which has gone more than a dollar above first-of-month indexes in some cases. “I’m not sure if people will learn from that and buy more baseload for June,” he went on, saying it depended on whether one expects the storage/power generation tug-of-war for supplies to heat up significantly during the month or not. The marketer also noted that utilities and end-users, especially in the Midwest, seemed more intent on using their own transportation more than usual, which was leading to a somewhat tight capacity market during bidweek.

In a Thursday advisory, consulting firm Weather 2000 chief meteorologist Michael Schlacter said, “On a personal note, the cool/dank weather is truly getting on the nerves of central and eastern U.S. residents, but our research shows no signs of a let-up, and the past six weeks have already verified the early stages of our cool spring/summer assessment. Pockets and exceptions can of course be found: Florida, Gulf Coast and Southern Texas will be removed, for the most part, from the cool anomalies plaguing their northern counterparts. Warm air advection by day and muggier evenings will generally maintain the status quo far south.

“Rumors and hype of sustained heat for the Northeast, Mid-Atlantic, Ohio Valley, Great Lakes (and basically the entire central and eastern U.S.) continue to be proven false. Northern hubs are still impressively tallying up HDDs [heating degree days] while nearing June, and CDDs [cooling degree days] and extreme temperatures are substantially reduced across the board. In early April we outlined the fact that (1.) major teleconnections phases and (2.) water vapor would be the main culprits behind this scenario, and they couldn’t have been portrayed more robustly (concurrent with our research), than they have this month. To achieve a cool/damp spring and summer pattern, one couldn’t have designed a more ideal combination of hemispheric patterns and atmospheric instability than what we’re witnessing in 2003. And such a combination and pattern imprint does not leave in a hurry. You name it {increased clouds, saturated soil, severe storms, flooding rains, reflective water vapor, fog, evapo-transpiration, closed lows and maritime influences}, we’ve got it. Week after week. And it’s off the charts this year.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.