Fading Weather Load = Softening Cash Prices
Finally, it was feeling more like spring than winter in nearly all market areas Wednesday, and the predictable market reaction was price declines ranging from barely lower to more than 60 cents, although the most common losses were between a dime and a quarter.
Wednesday's softness actually had been predicted for most areas by NGI sources the day before. They had allowed that lingering cold weather might allow the Northeast to hold its price ground for a bit longer, but that region shared in the overall downturn.
Traders could see no signs on the market horizon of any imminent rallies. "We got a little bump up on Nymex, but it had no effect on cash deals, which essentially had been completed by then," a Houston-based marketer said. He noted substantial jumps in crude oil and heating oil futures, but said those commodities are having less impact on the gas market now that the Iraq war seems increasingly closer to a successful conclusion for the U.S.-led coalition forces.
Also, sources who trade the Northeast and Gulf Coast reported that Tuesday's slide in late prices was repeated Wednesday. Northeast citygates fell despite that region being the last one still experiencing wintry weather with little chance for substantive moderation before the end of the weekend. Dracut started out in the low $6.20s, a Northeast trader said, "then headed straight south to $5.85 in approximately 3-cent increments." His Tennessee Zone 6 numbers fell about a quarter from start to finish.
A Gulf Coast marketer said prices in general were lower in late trading, although Tennessee's 800 Leg was the only one on which he himself saw a drop of more than a dime. Barring a shocker from the Energy Information Administration in its Thursday morning storage report, the marketer didn't see any prospects for a significant price rebound this week, "but I think cash will see mostly rangebound trading" with relatively little volatility.
A western source agreed that the market is looking "pretty smooth" lately, which generally translates into quiet trading activity. "Things have been trading around $5 or so at the PG&E citygate for what seems like almost forever," he said. "We're in a lull period: most of the country has moderate weather so there's little heating or cooling load anywhere, and we're just getting started in the storage injection season, so it's too early for that to have major market impact."
A net injection seems practically assured in this week's EIA report, a marketer commented, but because some people were withdrawing storage over the weekend and earlier this week, especially in northern market areas, he sees a good chance for a flat report next week "or maybe even a small net pull."
The National Weather Service predicted that temperatures will be above normal next week throughout the eastern half of the U.S. It expects below normal readings west of a line from eastern Montana to Arizona, along with normal conditions between the two regions.
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