An expiration-day nosedive by the February futures contract,chilly but unremarkable weather for this time of year (despitesnowfall and icing in some northern market areas), and the prospectof more small storage withdrawal reports in coming weeks kept bearsin command of the cash market Monday.

Price movement ranged from essentially flat (Southern Californiaborder) to down more than a dollar (PG&E citygate), but mostdeclines were clustered in the range of 30-50 cents.

In the middle of last week one trader was talking aboutend-of-month convergence indicating that either futures would have tocome down or cash would have to come up (see Daily GPI, Jan. 25). After Monday’s screen drop ofnearly a dollar, a substantial convergence gap still remains but nowit’s cash needing to fall in the last day of trading for January flow,a marketer said.

A Northeast trader is expecting a bearish storage report again(“probably another sub-100 Bcf pull”). Right now you have torespect the downside, he added. There are no transportation-relatedproblems in the Northeast and that does not bode well for higherprices, he said.

Many traders were ready to say goodbye to the January swingmarket and get on with February business, but “you’d never knowit’s bidweek from the lack of activity here,” said a marketer,reflecting the experience of other sources. There are lots ofsellers but almost no buyers, he said. “Can you believe what adifference 30 days can make? There was hardly any gas to be foundin the January bidweek. Now we almost have to give the stuff awayto get any action.”

An end-user scoffed at the idea of gas being “given away,” butdid allow that prices weren’t as onerous as they had been. Hehadn’t made any fixed-price purchases yet, preferring to wait andsee if the numbers could be squeezed even lower. He reported seeingsome “pretty high” index premiums except in Chicago, where hebought at index minus 0.25 cent. He was getting offers on ANR (bothlegs) at index plus a penny and on Sonat at index plus 4 cents.

An eastern trader for a large aggregator agreed with othersources that bidweek was having trouble getting off the ground.Buyers were holding back “because they know they’re in the driver’sseat for a change,” he said. He anticipates much fewer baseloaddeals than usual, saying a lot of people like their chances foreven lower swing prices in the February aftermarket.

Chicago citygate basis was down to plus 16-17 Monday afternoonafter being as strong as plus 24 last week, a source told DailyGPI. He was trading Chicago around $6.40 and coming close tomatching the screen with Henry Hub deals in the mid $6.20s. Hecommented, “Despite how far and how fast prices have fallen, youkind of have to want to sell these levels. Fundamentals remainbearish and now you have momentum to the downside.”

A western trader said San Juan Basin and Rockies buyers seekingto take advantage of prices with a “5” in front of the decimalpoint were starting to get active Monday afternoon as the screenkept tumbling lower. “Why not?” he asked. “They were paying almost$9.00” for January gas.

A Texas-based producer thought he might wind up doing no dealsat a fixed price; everything has been indexed so far, he said.”Trunkline was our rough spot. Everybody had it [gas on Trunkline]and nobody wanted it, so we left some blood on the field for thatone, but everything else was okay.” He saw some strength forTennessee Zone 1 and Sonat.

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