A break in the flat price pattern that has dominated the overallcash market during February came Tuesday, and appropriately it wasto the downside, where many sources had long expected prices to beheaded because of mild weather, a softening screen and a massivestorage surplus for this late in the winter season.

Price drops at most points ranged from barely perceptible toabout a nickel. The big ones of 18-20 cents or so occurred atNortheast citygates, and that was because they were retreating fromMonday’s spikes to as high as the $2.50s and $2.60s. Althoughfreezing weather lingered in the region Tuesday, the prospects ofwarmer temperatures were already easing gas demand.

A trader whose Columbia Gulf-onshore prices in the low $1.70swere only about a dime under those for TCO noted that transportfrom the onshore pool into TCO at Leach, KY, is usually about 16-17cents. It’s not that the Gulf Coast gas is overvalued, he said;rather, the excess of storage on the TCO system is causing its poolgas to be somewhat underpriced.

San Juan-Blanco dropped “big-time” to as low as $1.50 in theearly going as sellers tended to panic for a while, a marketersaid. But then prices rebounded to flat levels on either side of$1.60 as new buyers started emerging “after the dust settled,” headded.

People tried to get out of February positions early in order toget on with March business, a Houston trader said, but the Marchmarket remained sluggish in developing. A Gulf Coast producerreported “a tough time all afternoon” in getting a March package of10 MMcf/d sold; finally he got it done by accepting part-index,part-basis terms.

It does appear that March indexes will be down from February’s,said a source hearing $1.73-75 at the Southern California borderand $1.53-55 for the Rockies in general. Even those levels mightnot hold up. A trader who did a Northwest-domestic deal at $1.50Tuesday said someone told him to expect the $1.47 level today atthat point. There’s just not much demand showing up in the Rockies,he said.

A producer who sold San Juan-Blanco at $1.53 said a lot of dealsthere were being done at index minus 0.25-0.5. The Permian Basin isbeing very thinly traded so far for March, he said.

Other March fixed-price quotes included Blanco at $1.53-54, ElPaso-Permian at $1.58-60, and Stanfield at $1.58-59. The Stanfieldtrader perceived a transport squeeze to Malin; the March numbersshe was hearing are too low to justify shipping gas from Alberta,she said.

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