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Price Declines Accelerate in Weekend Business

Price Declines Accelerate in Weekend Business

After a brief fling with index levels or higher at midweek, it was back to sub-index territory Friday as the cash market, again cued by the futures screen in the absence of fundamentals, saw general drops between a nickel and more than 15 cents. Most declines were on either side of a dime. Despite the sizeable weekend pricing losses, nearly all points finished the week about even with the previous Friday's numbers or slightly higher.

Just about all Texas markets have gone back to about a dime under index, according to a Houston-based source. He said he spent much of last week "tweaking" industrial markets for both overpulls and underpulls. He reported getting fewer and fewer gas orders from the state's electric utilities as the week went on. And unlike last month, "I don't have any storage plays going on now," the source added.

San Juan Basin quotes, which had ridden high for much of the week based on processing plant and other outages, suffered Friday's biggest loss of 15 cents after most if not all of the constraints had ended. It also had by far the largest price range of about a quarter. Although the Blanco pool traded for most of the morning in the mid $1.80s, a marketer said, there was a late rebound to the mid to high $1.90s. He thought some traders had sold early without having the gas in their possession yet, expecting a continued free-fall in pricing. "Then they had to cover their shorts [short supply positions] and couldn't go to the Permian [Basin]" where prices were considerably higher around $2.06-07.

A NOVA imbalance tolerance change prompted by high linepack put downward pressure on intra-Alberta prices, according to a marketer whose high C$2.50s quotes fell by just over C10 cents.

Other than the big price downticks, the weekend market was pretty featureless, a Northeast trader said. Barring any unexpected market influences, he looks for low volatility to dominate through the middle of this week as much of the trading community attends the GasMart/Power '99 trade fair in Dallas.

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