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Cash Swoons Under Weather, Weekend Lethargy

Cash Swoons Under Weather, Weekend Lethargy

"The Three Stooges didn't fall as fast or as hard," one trader remarked, as the usual weekend demand crunch, a bearish 6- to 10-day forecast and Thursday's futures market plunge were cited as reasons for the nearly universal drops of over a nickel. New York Citygate prices were among the hardest hit Friday, as Monday's highpoint of $2.75 has given way to the mid $2.40s at the week's close.

A North Carolina-based buyer was not surprised by the market's decline heading into the weekend. "I was forced into the market to pick up some gas for peaking load earlier in the week, but have been inactive since. Weather has moderated nicely and the forecast is calling for more of the same," he added.

California prices were also driven down a dime or so Friday. PG&E Citygate fell from the mid $2.40s to the mid $2.30s and the SoCal border fell to the low $2.20s. "There is too much gas on the system," one western trader said about PG&E. "They have scheduled an OFO for Saturday because it is so overloaded, but that happens every year at this time. Traders are also noticing that it's warming up in the Northwest, so hydropower will start kicking in soon." He added that trading was unusually slow, as many western marketers had the day off to attend a Western Traders conference in Santa Fe, NM.

Chicago prices fell into the mid $2.30s with Chicago Citygate finishing the week at a 2 cent discount to Consumers Power. One source was not surprised by the drop. "Chicago had been artificially high all week. The weather was hot, but not hot enough to sustain the kind of pricing we were seeing. There was one major player out there buying all the Chicago gas he could muster. When he stopped buying the prices fell.

Florida pipes ascended to the high $2.30s and low $2.40s earlier this week, but thanks to Friday's drop, they are now trading in the high $2.20s. One Florida-based trader thinks the decline will help jump-start what has been a market devoid of buyers. "As the price dropped, it started getting a little better. The utilities are calling to try and bang out the lowest possible price using their oil supply as leverage. Unfortunately, their demand goes down with the weekend too. I suspect, the utilities will start coming around early next week, now that Florida gas is in the high $2.20s.

For the bulls, all is not lost said Wayne Knupp, strategy leader for Koch Trading. "On Monday, NEPOOL was selling electricity for $850-$1000/MWh, which means every facility was running at maximum strength," "That's a lot of gas being burned. It makes me think next week's AGA storage report will be a whole lot more bullish than this past week's report of a 91 Bcf injection."

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