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East Softer; West Sees Another Big Price Recovery

East Softer; West Sees Another Big Price Recovery

Eastern markets emerged from the weekend without seeing any rebound from Friday's slump. Prices continued to decline by mostly small amounts, with various points ranging from flat to just over a nickel lower. A small futures drop contributed to the cash bearishness, traders said, but more than anything else it was a relative dearth of air conditioning load that sent prices down.

The softness tended to be more pronounced in the Gulf Coast than in the Midcontinent. That was because heavy rain is causing rather un-summerish mild conditions in the Southeast, and Gulf prices are getting pinched by the lesser demand from Southern electric utilities than usually prevails around this time of year, a producer said.

Meanwhile, it was like d‚j… vu all over again out West as for the second straight week prices followed a Friday of big decreases with a Monday of strong recovery. Both Southern California Gas and Pacific Gas & Electric had ended their high-inventory OFOs over the weekend, and hot weather kept power generation load for gas high, a marketer said. San Juan Basin prices were especially strong, rising nearly 20 cents to the mid $2.00s, largely due to a maintenance outage of the Chaco (NM) Plant begun Monday by El Paso Field Services. That is keeping an estimated 450 MMcf/d-plus off the market through today, the marketer said; then the curtailment is expected to decrease gradually until the Chaco work is completed toward the end of this week.

One trader saw Kern River-Opal numbers rise from $1.94 to $2.00 as the morning proceeded, citing minor maintenance in the Opal area as pushing the uptick. However, a lot of supply showed up in late trading and caused Opal to retreat a bit to $1.98, he said.

Tennessee Line 500 fell very short at the end, according to a staffer of a large Gulf Coast aggregator. She was mildly surprised to see Tennessee trade a couple of cents above her Texas Eastern-East Louisiana deals at $2.03-05; usually it's Tetco that commands the premium, she said. The market seems pretty weak right now, said a Gulf Coast producer, but he sees higher pricing ahead. Gas futures seemed to have some upward momentum in Monday evening's Access trading, he said, and crude oil futures continue to hang around at just under $20/bbl. In addition, demand will pick up strongly when rain ends in the Southeast and the region returns to more normal sweltering temperatures, the producer predicted.

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