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Market Sees Tiny Gains as It Waits for Weather

Market Sees Tiny Gains as It Waits for Weather

Most cash trading points managed to squeeze out minor upticks Wednesday despite a modestly softer screen. Activity was subdued as weather fundamentals remained as relatively mild for summer as they were for much of last winter.

Noting the mild weather that has blanketed most of the South for the last week or so, a Texas trader said hotter temperatures are due this weekend, but that potential boost likely will be negated by the usual weekend drop in gas load. However, he added, "that means look out for Monday" when more heat will combine with the start of a new business week.

A Southern electric utility reported Wednesday was the first day this week it had bought any new gas "because it just hasn't been hot enough for normal power loads this time of year."

A marketer considered it "pretty likely" that the major California distributors will issue high-inventory OFOs again this weekend, especially since currently hot western weather is expected to moderate by then. He said he wouldn't be surprised to see the region's recent pattern of big Friday price drops followed by big Monday increases continue through the rest of the summer. The big problem, he said, "is you usually don't recover as much price territory on Monday as you lose on Friday, plus there's the hassle of scheduling around OFOs and imbalances."

Despite the current market doldrums, several sources had bullish near-term outlooks. The 59 Bcf storage injection report by AGA turned the year-on-year surplus into a deficit, said one trader. She also sees good reason to expect more heat in the major eastern and southern market areas next week to boost prices.

The Calgary Stampede continues to occupy much of the attention of many players in Canadian markets. That prompted one trader to quip, "There's a lot of tombstones around around here." Translated, that meant it's a dead market. However, he went on, it's wrong of some people to complain that Stampede causes illiquidity. "Actually, it (market) is very liquid. There's liquid lunches, liquid dinners, etc.," he said, referring to the Stampede-related socializing of traders.

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