Mired in a bog of bearish influences, cash prices continued to drift downward Wednesday at nearly all non-California points. Much like the day before, most of the downturn ranged between about a nickel and a dime, but with larger drops in the teens recorded at several Northeast citygates.

Much of the nation’s colder weather remained concentrated in western areas, although a cold front was due to make the Upper Midwest quite a bit chillier today. In general, however, weather is still unsupportive of any potential rebound in prices.

Flat quotes at California points remained relatively firm in comparison to the overall market. Although it did not issue an OFO, PG&E projected linepack remaining in the vicinity of its minimum target levels through Saturday. It also expected system storage withdrawals to remain above 1 Bcf/d through at least today. Rockies/Pacific Northwest numbers tended to see some of the day’s smaller declines of less than a nickel, but a marketer reported intra-Alberta prices down nearly C10 cents.

AGA reported 124 Bcf of storage withdrawals made last week, which tended to fall short of most prior expectations. Nymex essentially greeted it with a “so what” shrug of the shoulders, closing out the day with the February contract down only 3 cents. But cash traders agreed that in light of all the negative fundamentals weighing on prices, the relatively light withdrawal volume in mid-winter is almost certain to keep physical prices falling today. The report cut another slice out of the year-on-year inventory surplus but still left it in excess of 1 Tcf.

A Midcontinent marketer said he thought the screen had some support levels kicking in Wednesday afternoon, “and that kept the reaction to AGA muted.” He and sources in other markets agreed that there is little sense of storage usage accelerating to any significant degree, even with the market now in the latter half of the traditional withdrawal season.

The marketer sees “almost a non-injection season looming this year, the way things are going now.” Most people who aren’t required to cycle inventories each year seem prepared to let their storage ride through summer, which bodes ill for prices at that time, he said. The market also reported hearing much weaker index-related prices being discussed for the summer months, with discounts to index getting more negative than in past seasons. The main weakness of this winter’s market, he said, is that “it’s been a case of [cold] weather here and there, but never all over for very long.”

“That was a pretty exciting AGA, wasn’t it?” said a Gulf Coast producer, his voice dripping with sarcasm. He reflected popular trader opinion in observing that “prices seem to be in a slow death spiral for the foreseeable future.” Another producer said that relatively spring-like weather is likely to remain throughout the eastern U.S. for at least a few more days. “There is an outlook for colder weather in the 15-day forecast, but there isn’t much confidence in that,” he added.

The Gulf Coast producer concluded: “We sure had an exciting market year in 2000. I don’t know how ‘exciting’ 2002 is going to be, but I’m pretty sure it won’t be the same.”

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