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Spring Weather, Flat Futures Prolong Cash Lull

Spring Weather, Flat Futures Prolong Cash Lull

The natural gas cash market went through a second day of overall flatness Wednesday as most of the nation absorbed spring-like temperatures on St. Patrick's Day and calmness pervaded the futures market.

Some sources, who expected to see softer prices in the Midcontinent and the Basins, were surprised to see some minor upticks in their areas. "I had utilities give me gas back early in the day and then I had people buying it at a higher price" later in the day, said a Midcontinent-area marketer.

"Most of the people buying on the day market today gas were marketers," another source said. He added that the only logical reason for any minor gains Wednesday was the small rise in gas futures late in the day - "that, and maybe some expectations of a reasonable storage withdrawal," he added.

The American Gas Association (AGA) reported 134 Bcf in storage withdrawals for the week ending March 12, which was at the higher end of most market expectations. However, "I don't think this market cares much about the storage report right now with temperatures being as warm as they are," said one Gulf Coast marketer. The storage surplus compared to last year is still 355 Bcf.

California and San Juan prices also survived expectations of softness for the day. "Even though utilities weren't buying [Wednesday], we had east of California utilities buying the day before. This, coupled with relatively cold temperatures in the area could have left a residual effect on prices," said a Western trader. In addition, the trader said that many marketers are net-short in the San Juan market right now. And "once marketers are short and you get a little utility drive like we saw over the last couple of days, things tend to point upwards." The trader added that under this scenario, expected cooler temperatures in the area through the weekend were apparently enough to support prices.

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