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Prices Down for Weekend; Rebound Seen This Week

Prices Down for Weekend; Rebound Seen This Week

The weekend cash market followed the script written for it by falling between between a nickel and just over a dime at nearly all points Friday. It was a "typical" low-demand period phenomena, according to one marketer; another, phrasing it slightly differently, called it "just the usual weekend blowout."

But though the general softening was hardly a shocker to anyone, some were surprised at the ability of a few points to reverse field in late activity. The only thing that gave any support to Gulf Coast and Northeast prices was Henry Hub cash trading higher near the end, one source said. The highly volatile San Juan-Blanco pool (range of 20 cents) was another rebound example.

A trader who saw Columbia-Appalachia start moving up from the $2.30s into the $2.40s after 10:30 a.m. thought it was due to "more room in storage than people thought" and the rumored contemplation of OFOs by utilities Delmarva Power & Light, Baltimore Gas & Electric and Cincinnati Gas & Electric. However, no OFOs actually materialized, he said.

Forecasts of hotter weather, mostly in the eastern three-fourths of the U.S., have most traders expecting a moderate to strong price upswing this week. The dwindling storage surplus and a 4-cent screen gain Friday-which went against the grain of the cash weakness-enhanced the predictions of higher prices. Also, another reason for bullishness is that July crude oil futures climbed back above $17/bbl Friday, one source noted.

"A lot of people thought prices would be off more than they were today [Friday], especially in the West," said the head of western trading for a major aggregator. He thought the market showed quite a bit of resiliency, "especially in light of no UEG [utility electric generation] load in California." It was quite a wild ride in San Juan Basin, the trader said, where Blanco numbers got down to the mid $1.80s at one point but were back above $2 near the end of trading. People don't seem to be keeping pace with storage injections in western markets, he said. Thus with currently cool weather in the region dampening gas prices, he expects a strong rebound "when it warms up." Intra-Alberta defied the overall weaker market with a small increase Friday, which a marketer attributed to trading that goes on all day; "thus it [intra-Alberta] had a longer time to be influenced by the screen's rise."

A Texas buyer had intended to stay out of the market, but said it was just too tempting to pass up when Houston Ship Channel, Katy and Carthage numbers fell almost a dime into the mid to high $2.20s.

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