A diving screen set a softer tone for most points Monday in eastern swing markets. Anticipation of another AGA storage injection report in the vicinity of 100 Bcf contributed to bearish feelings. However, most of the eastern downturns were fairly mild at about 15 cents or less, and much of the West was climbing back up strongly from the price depths seen in Friday’s trading for the weekend.

A Midcontinent trader expressed surprise that Monday’s cash declines were not bigger. He had to assume that hotter temperatures approaching this week in several eastern regions helped avert a general price rout. But he also felt that the tremendous weakness in futures will be weighing on the minds of cash traders this morning.

The marketing representative for a group of Gulf Coast producers said his clients “are starting to hear of potential for gas prices going below $3, and they’re not very happy about it.” They realize it [much higher prices] was a nice ride while it lasted, he said, but the upsurge in gas drilling over the past year or so could begin to get pared back if negative price trends continue much longer.

Border-SoCalGas quotes rebounded by about $2 to nearly $6 and moved in an up-down-up price pattern, one marketer said. The utility kept Saturday’s Overnominations Day declaration in effect through Sunday, but did not extend it beyond the weekend.

Most other western points also were rallying, but that was more a reflection of how weak they had been Friday than any inherent price strength emerging Monday, a Rockies trader said. Intra-Alberta, which is probably the most directly screen-responsive cash trading point of all, was one of the West’s rare weaker points Monday with a tumble of about C$0.40. Sumas also retreated to the tune of more than 20 cents. One trader noted that Westcoast is maintaining a linepack imbalance tolerance range of zero for packing the system but 20% for drafting the system. Also, extra supplies will be returning to the market Thursday as maintenance at Westcoast’s Fort Nelson Plant is due to end, he said.

The July bidweek was a slow starter for many traders. “The people I’ve been talking to want to wait a while to get closer to the screen expiry before they commit anything,” a producer said.

It was no secret prior to bidweek that the July market was looking pretty weak, and that was enhanced by Monday’s screen plunge of nearly 30 cents. Only Transco Station 65 is getting any premium to index in the Gulf Coast, and that was tiny at index plus 0.25 cents, a Houston trader said. Index discounts ranging from minus 0.5 cents to 3 cents are the rule at just about all other Gulf points, he said. A marketer reported Chicago citygates were seeing even larger discounts of minus 2-4 cents off index.

Chicago physical basis had weakened just a tad Monday to plus 1-1.75 cents, a Midwest source said. Based on the dive in futures Monday, that would place Chicago fixed prices in the mid $3.40s, about 40 cents down from the June index of $3.84. Michigan citygate basis was considerably stronger than Chicago’s, the source said. He reported deals at plus 8-8.5 cents for Consumers Energy and said MichCon basis was approximately equivalent, while ANR ML-7 was running about 3 cents higher.

Border-SoCalGas basis got even weaker despite the fall of July futures. Reported on either side of $2 prior to the weekend, border basis slipped as low as $1.60-70 Monday, a western trader said, although he heard it later rallied to around plus $1.90.

Late-June/July price convergence had a long way to go for one Rockies trader. He reported a July fixed-price deal at $2.06 for Kern River-Opal, a far cry from his Opal swing numbers that were mostly in the $2.70s.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.