Major rebounds at El Paso-San Juan and the Southern California border were joined by only the Permian Basin/Waha market and a couple of Rockies points in realizing price increases Monday. Other points ranged from flat to as much as a dime lower, but most of the losses were modest at around a nickel or less.

With almost nothing in heating load remaining (outside of a winter storm warning being posted for Tuesday in parts of Montana and predictions of 30s highs in the northern Rockies) and the energy futures complex registering big drops after the Saudi Arabian oil minister urged a production boost of 1.5 million bbl/d by members of the Organization of Petroleum Exporting Countries, at least a couple of traders look for moderate softening to continue dominating the cash market Tuesday. But others wondered if forecasts for above normal temperatures in much of the U.S. later this week could signal enough growth in cooling demand to keep a floor under physical prices.

Parts of the desert Southwest, with daily highs approaching 100 degrees, already have plenty of air conditioners being cranked up. That likely had something to do with San Juan-Blanco and border numbers topping the market with increases of 37 cents and 16 cents respectively. But discussing the San Juan’s recovery of more than half of its half-dollar loss Friday, a marketer said she was “so frustrated because I really can’t understand this market.”

El Paso-San Juan “did what we expected over the weekend, falling big because Transwestern maintenance caused big constraint on that pipeline starting Monday” and shifted a lot of basin supplies over to El Paso instead (see Daily GPI, May 10), the marketer said. “But it all flip-flopped today.” The approximately 435 MMcf/d capacity reduction on Transwestern’s San Juan Lateral will continue through Thursday, but the price dynamics of the transportation constraint seemed to be in effect no longer, she went on.

Quotes for the PG&E citygate and Malin joined the overall small declines, probably as the aftereffect of a high-linepack OFO by the utility Sunday (see Transportation Notes). But SoCalGas, which still has ample storage capacity left to fill, did not issue an OFO and that helped the border to record a double-digit price increase.

Count a Northeast marketer among those who look for rising power generation demand to keep cash gas prices from dropping much further. “It’s supposed to be warmer in the 80s in the Northeast later this week, and I think we’ll see some air conditioning load start to kick in,” he said. He echoed the thinking of other sources in commenting that there was “nothing too exciting” in eastern markets Monday, so many traders had time to observe the major weakness in oil product futures at Nymex. Crude oil “came off pretty hard” on the OPEC news, falling an even dollar to $38.93/bbl, the marketer noted. The natural gas contract obediently followed crude’s example lower, and then back up a ways and finally lower again, he said.

A Midwest trader had doubts about hotter weather supporting prices in that region. The forecasts are for above normal temperatures this week in the Midwest, he said, but a lot of thunderstorms also are due, which could dampen any increase in cooling load. He looks for the market to trade mostly sideways for a while, awaiting further developments. He remarked that a dollar plunge in oil futures may seem like a major move at first glance, “but after all, it still leaves the price nearly $39/bbl.”

A Lower Midwest utility buyer also was skeptical of the likelihood of rising prices, saying, “We had a little cooling load over the weekend, but it’s in the 70s today, with mid 80s highs expected Tuesday but then back to the 70s for the rest of the week, so demand is light around here.” Other than watching the gyrations in oil product futures, he also found the current cash gas market “pretty quiet.”

Florida Gas Transmission Zone 3 saw the day’s biggest loss of a dime, and a utility buyer in Florida saw that as totally unsurprising. “The loads are minimal here” because the Sunshine State is neither very hot nor cold, the buyer said. She noted that FGT had even quit issuing postings about “potential” Overage Alert Day notices, something which it had done several times in the last couple of weeks but never followed through on.

A couple of major nuclear facilities in the West are either in the process of ramping up from planned maintenance outages or will do so later this month (see story in Power Market Today). The 1,270 MW Palo Verde 1 unit in Arizona began the restart procedure Monday and is expected to be at 100% operation later this week. California’s Diablo Canyon 1 nuke had been scheduled to be powering back up about this time as well, but operator PG&E said extra work required on the generator means the unit must remain idle until near the end of May.

Lehman Brothers analyst Thomas Driscoll expects the Energy Information Administration to report a storage injection of 65 Bcf for the week ended May 7, which would be barely higher than the 64 Bcf build for the comparable period last year.

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