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Some Firmness Lingers Amid Overall Price Dips

Following two days of mostly higher quotes, the cash market acknowledged the continuing bearish nature of weather, screen and storage factors -- supplemented by the extra decline of industrial load associated with a long holiday weekend -- by falling from a couple of pennies to around 40 cents at a solid majority of points Friday. Westcoast Station 2 was a special case in plunging about C80 cents.

But thanks to an expected weekend infusion of colder temperatures along the East Coast, most Northeast citygates and a few Gulf Coast points eked out further modest gains of up to about 20 cents.

Although the Midwest was also due to have a cold front with occasional snowfall moving through it over the weekend, that market did not get the same bracing effect on prices as the Northeast. Most Midcontinent/Midwest points fell by about 20 cents or more.

No major pipes were known to have OFO-like constraints in place for the start of the weekend. However, citing forecasts of cold weather in its Florida market area Saturday night and Sunday morning, Florida Gas Transmission cautioned customers there Friday of the potential of an Overage Alert Day being declared on an upcoming gas day.

"All I can see is storage buying right now" by those who have some injection space in their accounts, said a Midcontinent producer. Otherwise there is virtually no other market at all, he added. The situation is starting to create high-linepack issues for several Midcontinent pipes, he said. He anticipates a "real bearish" upcoming storage report, with the possibility of another small net injection.

The producer reported already getting calls about next month's supply from what he deemed "nervous" traders. The early indications are there will be many sellers and few buyers in bidweek, he said. February is a very critical month for this market, the producer went on, because he thinks a lot of people will be pushing harder to unload their storage gas with the end of winter approaching. Prices could easily be back to the $6 area by early spring, he concluded.

At this time last year, only Northeast citygates were averaging above $6.

The Northeast is going to get a little cold spell over the weekend with lows around freezing, but then a warm-up will follow immediately starting around the end of the long weekend, a Gulf Coast producer said. If the loss of industrial load due to the holiday hadn't partially negated the price impact of the weekend's cold, the cash market would have been considerably firmer than it is, he said.

Friday was a pretty quiet trading day, with his company "trying to clear our positions" before just about everybody leaves early, the producer continued. The company is "trying to keep gas in storage rather than take it out" as it normally would be doing in mid-winter, he said, adding that "it seems like everybody is long" on supply.

Calling it a "ho-hum market," a marketer said temperatures were around 50 degrees Friday afternoon in her section of the Midwest, but the region should see a little bit of freezing over the weekend.

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