Confronted with growing weakness in weather fundamentals, more than one trader was surprised to see a majority of points stay close to flat Wednesday. Few of them varied from unchanged by more than about a nickel. Only Northeast citygates significantly extended Tuesday’s softness by dropping 8-15 cents.

With the West cooling off, the Northeast and Midwest warming up, and the South staying about as mild as it has been for quite a while, one source didn’t see any reason for prices not to keep going down, but suggested that expectations of a bullish storage withdrawal being reported Thursday may have contributed some psychological firmness to the market.

A marketer confessed to being “amazed” at how Chicago citygates held up with high temperatures currently in the 50s. There was no clear clue as to why prices didn’t continue to fall, he said. He could tell there were some storage injection purchases being made, “but it didn’t make sense to buy spot today for storage because current prices are higher than where April numbers are shaping up.” The marketer noted that Chicago averaged a dime less than April futures Tuesday but was flat to the screen Wednesday, which told him there was relative strength in the physical gas prices despite their flatness.

A utility buyer who had previously reported buying small amounts of extra system gas to put into storage and save on cycling costs due to high summer futures prices (see Daily GPI, March 12) said Wednesday his company had backed off that practice since then. He explained that recent declines in Nymex’s near-term out months had erased the potential cycling savings “except for one account.” The utility is injecting more than it’s withdrawing already, and the way the weather is looking, it will stay in net injection mode through next fall, he said. Remarking on mostly flat Gulf Coast numbers Wednesday while Northeast citygates fell, he said that occurrence “pretty much knocked out coverage of transportation variable costs.”

Even with a zero-tolerance high-linepack OFO by PG&E (see Transportation Notes) and mild weather throughout most of the West, regional quotes were mixed and the PG&E citygate fell by less than a nickel. SoCalGas did not issue an OFO.

“There is just mild action out West,” said a California trader. “Overcast and mild weather for the rest of the week should be the norm. There was hardly any [price] movement on the day at all.”

The National Weather Service sees a very mild business week coming up. The federal agency’s forecast for March 29-April 2 says that except for normal conditions in the lower half of Florida and in a thin sliver of the East Coast running from Maine to North Carolina, the entire rest of the Lower 48 states should experience above normal temperatures.

“The weather is getting milder and prices are dropping; that about sums it up” for the Northeast market, a utility buyer in the region commented. Storage and transportation are both in good shape, so not much else is really going on, she went on. The buyer hadn’t started talking about April business yet, saying she needed to get some capacity releases arranged first.

Capacity release was on the mind of a staffer at another Northeast utility. “A lot of people are calling us to ask for Transco capacity in April,” he said. He wasn’t sure why the concentration was on Transco and not on other pipes, but said it may have been related to a week-long restriction at Transco’s Station 35 scheduled to start April 5 (see Transportation Notes). Some people must be willing to buy capacity release for an entire month in order to avoid constraints for a week, he speculated.

The staffer reported seeing an April deal done on ICE at basis of plus 45 cents for the Transco Zone 6 non-New York City pool, and that he was also hearing basis talk of minus 8 cents for Tennessee’s 500 and 800 Legs and plus 29 cents for Dominion.

A Midcontinent marketer said he hadn’t done any April deals yet “other than a few little indexed RFPs” (requests for proposals). However, he added, “Most people were telling me earlier this month that they’re pretty well set for April supplies already,” which suggested weak bidweek pricing.

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