For nearly all points, the late-November swing price softeningthat had begun Monday upon emergence from the holiday weekendcontinued at a much accelerated pace Tuesday. The conspicuousexceptions? The same ones that have dazzled the rest of the marketsince Thanksgiving week began with numbers well over $10:California and the Pacific Northwest points where Canadian gas istraded (Sumas, Stanfield and Kingsgate).

Points outside California and the Northwest generally fellbetween a quarter and about 40 cents. Another steep plunge by theDecember futures contract on its expiration date helped point theway down, but again it was considerably more moderatepost-Thanksgiving weather forecasts that provided most of theimpetus for the cash dive, sources said. This happened despitepredictions of winter storms in the Midwest and Northeast beforethe weekend, one said.

“I had thought it reasonable, after the Nymex’snearly-last-minute jump last Wednesday followed by a large storagewithdrawal figure that many people expect to be exceeded [today],to expect a price rebound this week,” said a Gulf Coast trader.”Guess it shows I don’t have this market figured out very well.”

About the California rebound from Monday’s downturn, one sourcecommented, “Same old song and dance: they need the gas inCalifornia, and it’s tough getting enough of it moved there.” Awestern marketer sounded much the same theme. “It’s simple,” hesaid. “The west is short, there’s high demand, and we’re short onstorage. Also, it’s the beginning of winter, and not a very prettybeginning at that. There’s going to be major sticker shock toend-users.”

A marketer noted that the Sonat bulletin board was estimating acumulative system cash-out imbalance for November at slightly morethan 900,000 dekatherms short as of Sunday. Because the monthlycash-out price is $5.17 (what shippers with negative imbalanceswould pay the pipeline for their shortfalls) and Sonat was tradingmostly in the low $5.90s Tuesday, there’s incentive to keepshorting the pipe as much as allowed (2% tolerance) Tuesday andtoday. “After all, why would someone want to buy imbalance makeupgas at more than 70 cents above what they will pay for cash-out?”he asked. A similar situation is pretty much true of other Gulfpipes, he added.

Several sources are looking for an AGA storage withdrawal reportthis afternoon in the 90-110 Bcf range, with a majority leaningtowards slightly over 103 Bcf.

Traders in the Gulf Coast and Northeast markets reported bothfixed prices and basis for November weakening a bit Tuesday.”Normally you’d expect basis to strengthen when the screen plungeslike that, but that was the old gas market,” one said. However, aChicago-oriented marketer reported seeing citygate basis comingback up a couple of cents Tuesday after weakening Monday.

California border basis continued to explode, with a buyerreporting numbers up to plus 735 Tuesday. Fixed prices were tradingin the $14s at the border and also at Malin, he said.

According to another Midwest trader, “Everyone is being prettyreserved with trading physical gas this time. The thinking is that’we had a great year. Why do anything to screw it up in December?”

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