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Screen Provides Stability for Most Cash Prices

Screen Provides Stability for Most Cash Prices

Given modest support by a small screen gain, most cash trading points tended to level off Thursday instead of continuing a slide that many had expected would last into the weekend. Northeast citygates constituted the rare weaker market in the East with drops of almost a nickel as the region cooled off further from a heat wave that set power generation load records early this week.

The day's biggest decline of almost a dime occurred at the PG&E citygate, where the utility's high-inventory OFO for today (see Transportation Notes) deterred traders. It was the first such non-weekend OFO of the season, according to a marketer. The related Malin delivery point fell almost a nickel, but the Southern California border was essentially flat as SoCal Gas declined to declare an OFO-like Overnominations Day, he said. It's still hot in California and forecasts are for even hotter weather over the weekend, the marketer added, so he expects to see little decline in western prices today.

One source suggested AGA's report of 69 Bcf in storage injections last week may have been just enough on the low side of expectations to encourage bullish-minded traders. A Gulf Coast marketer thought prices might even achieve a small rebound Thursday due to the storage report and Access futures trading's positive reaction to it Wednesday evening, but he found most pipes priced "pretty much flat from the day before."

The cutbacks on gas purchasing by electric utilities have been quite noticeable in the last couple of days, a Midcontinent trader said. He and an area producer agreed the market appears to be settling at least temporarily back into the low-volatility doldrums that prevailed prior to the recent heat wave fireworks. The producer managed to see a possibility for a flat weekend market. With industrial buyers reducing gas takes, many traders are poised to snap up packages today at what they expect will be significantly lower prices, he said. "Too many" have that mindset to allow a sizeable price dip, the producer concluded. However, should Henry Hub futures for August remain around $2.16 while July cash in the Midcontinent stays in the $2.10 neighborhood, "I expect commercial storage holders to sell physical gas and buy the August Nymex contract," he said.

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