Despite a Wednesday afternoon storage report that many tradersconsidered modestly bullish, most prices fell by up to a nickelThursday. California and a few Rockies and South Texas points, withflat to slightly higher showings, defied the overall trend.

With more and more spring-like weather dominating the landscape,it’s not surprising to see prices fall a bit further, said aNortheastern utility buyer. “Our gas quantities are very small nowwith all these warmer temperatures moving into the region,” wherethe largest price drops of a nickel or so tended to cluster, headded.

For the most part, a little muscle-flexing by gas futures cametoo late to influence cash trading. “When we left for lunch, thescreen was still in the $2.70s,” a Texas marketer said. “When wegot back it was up to $2.84 and we were asking each other whathappened.”

Houston Ship Channel numbers were rising into the low $2.80s asthe morning wore on, one trader said, when electric utilityReliant-HL&P became a large buyer because their fuel oilpipeline was going down for maintenance for three or four days.However, Katy gas was very easy to find Thursday, he said.

The Southern California border-San Juan Basin spread widenedeven further to nearly 30 cents, making it extremely attractive tobuy in the basin and sell at the border since variable transportcosts are only 12-13 cents, a western source said. There was stillplenty of demand at the border, where prices were up a couple ofcents, as California remained moderately chilly, he said. But thebasins weakened because east-of-California utilities were cuttingpurchases as their weather continued to warm up, he explained.

Sources were divided on which way the market will go today. Someargued the screen’s late run-up Thursday might spur at least flator possibly slightly higher quotes today. But more of them figuredwidespread mild weather would combine with lower weekend demand topull prices down a few cents further.

Looking ahead to April, one trader reported developing physicalbasis of minus 8 for Waha, minus 13 for El Paso-Permian and minus 8for Northern Natural-demarc. She and another source agreed on plus6-7 for the Southern California border, saying basis there changedvery little even after the screen’s rise.

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