Wednesday marked the first time in a week that double-digitmoves were nowhere to be found in the cash market. Most pointsregistered small gains of 2 to 5 cents, feeding off a strongfutures screen and a bullish American Gas Association (AGA) storagereport of a 26 Bcf injection.

The AGA report was well below industry expectations of a 35-40Bcf injection and actually included an 11 Bcf withdrawal in theProducing Region. One trader, who harbored a guess of a 38 Bcfinjection before the actual number was announced, said it wouldtake a number below 30 Bcf to make an impact on trading. “Mosteverybody knows what is going on by now,” he said. “The fact thateverybody has been taking gas out of storage won’t surprise anyoneand has already demonstrated its impact through the futures screen.If the number comes out where people think it will, in the 38 Bcfrange, the report won’t have much impact. I think it would take anumber below 30 to really grab people’s attention.”

The only point to register a decrease Wednesday was Transco Zone6 (New York), which fell into the high 2.80s. “The basis was reallyinflated last week when Transco Zone 6 (NY) was trading at a 32- to34-cent premium to the Henry Hub,” one trader said. “Now it hassettled in the plus-25 range on the shoulders of a strong futuresmarket which has been able to soften the blow of lessening powergeneration demand.” Other points in the Northeast fared better asM3 and Transco Zone 6 (non-NY) rose a few pennies to a nickel.

The largest gains of the day were seen in the Rockies, asQuestar jumped into the high $2.10s. Although many sources said thescreen was the main factor in the increases, one source added thatcontinuing Aeco strength and the ending of the Opal maintenancehelped support prices as well.

One western trader said business was back to normal Wednesdayafter PG&E lifted the high-inventory Operational Flow Order itplaced on its system Tuesday. PG&E gained about a nickel intothe high $2.60s and the Southern California Border rose into thelow $2.60s.

In the Midwest, the Chicago market continued to feel very short,one trader said. It seems that several marketers have gone into themonth short and that is causing Chicago to be very well bid. TheChicago citygate traded as high as $2.70 yesterday. Despite coolingtemperatures, demand for gas on the Oklahoma intrastate pipes hasremained strong as well. Almost across the board prices were upbetween 5 and 7 cents.

In the Gulf Coast, prices nudged up to index levels, one sourcesaid, but could not progress further. “Everything was up a littlefrom yesterday, and the outlook seemed strong in the morning. Butthen I think the lack of power generation demand in the Northeastfinally caught up to us and the move kind of halted. There seemedto be lots of gas out there.”

Looking forward, one source was already feeling bearish aboutthe next storage report, noting that a small injection this weekwill be an act unlikely to be repeated next week. “This week isturning out to be much cooler than last week. The need for gas wasmuch stronger last week and that sets up some bearish situationsfor next week’s storage report.”

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