What was widely considered a bearish storage report combinedwith falling Nymex futures prices to deal the cash market a losinghand Thursday as most delivery points lost about eight cents onaverage.

“The storage report and a bearish screen were just setting us upfor a bad day,” said one Gulf Coast marketer. “The AGA’s storagereport, which came in higher than most expectations, came at a timewhen cash is already weak and basically pushed it further down whenmany had thought that prices have finally hit a bottom,” he added.

Most sources do not expect too much to happen on the upside intoday’s trading session, especially with Nymex futures closing on aweak note. The August futures contract settled its regular sessionon Thursday down 9.9 cents. “Cash may not go much lower, but yousure can’t expect a big bounce through the weekend,” one sourcesaid.

A Houston-based trader said the interesting thing is there isplenty of demand, especially with the heat out West, but pricesstill are declining. “This leads me to believe inventory levels arethe main thing keeping a lid on higher prices. The only thing rightnow that would cause prices to rally is if we have an extended heatwave on the East Coast, or a Hurricane hitting supply areas in theGulf Coast,” the source said. The eastern markets haven’t beenpulling much gas simply because the region has not experienced anyconsistent hot weather patterns so far this cooling season.

Above-normal temperatures and continuing storage and pipelineconstraints prevented Rockies and California Border prices fromdropping. Most Rockies points remained flat or down one or twocents with Sumas and Kingsgate managing small gains. A Rockiestrader who did most of his regional trades in the $1.78-79 level,said prices were slightly off as an initial reaction to the screenand the declines at most other points across the country but laterstarted creeping back up to the low to mid-$1.80s. “Demand is stillhigh out here,” the trader said. “It has been very hard to get ahold of interruptible supplies partially because of somemaintenance work still being done at the Chehalis compressorstation on Northwest,” he said.

A Chicago trader who reported a citygate deal at $2.18 saidthere seemed to be a lot of activity for August gas at Chicago.”This could be buyers stepping up, realizing the value of $2.20Chicago gas for the month of August,” she said. AnotherMidcontinent trader said Michigan Consolidated (MichCon) has beentrading at a substantial discount to Chicago. “This was mainlybecause of electric generation demand in Chicago being responsiblefor its relative strength and the storage situation responsible forthe weakness in Michigan where storage is plentiful,” he explained.He added that supply from Consumers Power has been having an easiertime getting to Chicago than from MichCon, which resulted inMichCon trading at a discount to Consumers as well.

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