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Softer Cash Prices Buck Supportive Influences

Softer Cash Prices Buck Supportive Influences

Slowly but surely the faux summer that much of the eastern U.S. has experienced recently is turning into "real summer," a marketer noted. But even that and a moderate gain by the August Henry Hub futures contract were not enough to avert softening at most cash trading points Thursday. Eastern declines tended to be minuscule, with a few points staying flat and few others falling by more than 1-2 cents. But an easing of Southwest supply constraints and generally cooler weather in the West caused larger price drops in the West, topped by a loss of several cents in the San Juan Basin.

Increases of about 3 cents in Transco's Zone 6 (both NYC and otherwise) provided about the only gains of more than a penny or so. That reflected another market anomaly, because the Midwest appeared to be heating up more quickly than the Northeast, yet Midwest citygates were flat to off a couple of cents.

Gulf Coast cash in general opened a bit firmer at $2.13, got up to $2.14, fell to $2.09 and then wound up around $2.11, a utility-affiliated marketer said. In other words, he added, it kind of piddled around without going much of anywhere. Even with a warming trend, power generation load remained weak in the South, another trader said.

A Midcontinent source thought prices would fall more than they did while the screen was at its low point of $2.11, but said they "hung in there" largely due to warmer weather.

Although a turbine unexpectedly remained down at El Paso's White Rock (NM) Station, keeping a constraint of 200 MMcf/d in San Juan Basin (see Transportation Notes), most of the basin's major supply curtailment of more than 450 MMcf/d ended with completion of maintenance at El Paso Field Services' Chaco Plant. The return of that much gas to market, along with moderating western temperatures, had a rippling negative effect on the Waha/Permian and California markets and on several Rockies pipes.

Following temperatures around 85 degrees earlier this week, it was wet and near freezing in the Calgary vicinity Wednesday and Thursday, one trader said. Such conditions may have generated a modicum of heating demand, but it didn't keep intra-Alberta prices from falling almost a nickel to around C$2.67-68, she added.

Widely anticipated repeats of weekend OFOs by the big California LDCs are likely to keep western prices in a free-fall today, sources said. However, several thought the significantly hotter weather expected over the weekend in eastern markets could very well cancel the usual low-demand effect on prices.

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