The cash market proved to be stronger Wednesday than some sources had expected. Despite the big declines in energy futures the day before and a general dearth of substantial weather load in most regions, most points ranged from flat to up as much as about a quarter. A few Northeast citygates fell anywhere from a nickel to 20 cents, while scattered other points saw declines of about a nickel or less.

The natural gas screen provided little guidance to cash traders, muddling around the vicinity of flat during the morning before winding up down about 6 cents. However, major weakness continued in crude oil futures, which finished the day at $29.88/bbl, their first sub-$30 close in two months. Heating oil futures also recorded a significant drop.

A Northeast trader said he was not really sure why most points rose Tuesday, “but our Northeast market really behaved for first time in a month based on actual weather fundamentals.” He expects overall softness to return Thursday and even more in Friday’s trading for the weekend. Dracut [Maritimes & Northeast deliveries into Tennessee] basis for April is looking like plus 50 cents at this time, the trader said.

A Gulf Coast marketer reporting large trading volumes in Florida Gas Transmission’s Zone 3 in the $5.20s said, “It’s called 90-degree temps in Florida generating all that volume.” He noted that the 5% tolerance in the pipeline’s Overage Alert Day notice [see Transportation Notes), the first such notice in several weeks, is “pretty stiff.” The marketer went on to comment that part of the reason for the Gulf Coast’s upticks is that air conditioning demand is starting to build from Houston to Miami and at points in between. “We’re entering the transition period from heating season to cooling season,” he said.

A late-winter storm left Denver and other parts of Colorado and Wyoming buried under snow, but conditions were already dissipating Wednesday. At least one marketing firm in the Denver area had its staffers work from home Wednesday rather than trying to make it into the office. Most of the West is scheduled to experience temperatures close to seasonal averages Thursday, according to The Weather Channel.

An Unauthorized Overpull Penalty on El Paso helped boost numbers in the Permian and San Juan Basins because it didn’t get lifted until mid-morning (see Transportation Notes), after many deals had already been completed, a western trader said. Also, prices have gotten so far below index that it’s helping encourage people to buy for storage even before the traditional injection season begins in April, she added. “I’m definitely hearing that” from California customers.

Prices were rising as trading went on, several western sources agreed. One buyer quoting San Juan-Bondad from the mid $4.40s to mid $4.50s in early deals said his packages had risen to the mid $4.60s near deadline.

Alberta is thawing out with almost no snow left on the ground outside the mountainous elevations, noted a Calgary-based producer reporting same-day intra-Alberta packages in the low C$6.60s. “I think we’ve finally turned the corner on winter,” he said.

The National Weather Service presented a mixed temperature picture for next week. The only below normal areas in its six- to 10-day forecast Wednesday were in the Gulf Coast states from South Texas through the Florida Panhandle and in parts of the Upper Plains and northern Rockies. Above normal readings are predicted for the Northeast through the eastern half of the Midwest, along with California and much of the Southwest. The rest of the Lower 48 should be normal, NWS said.

It’s hard to say if or how an Iraq war, which could be reality by the time people return to their offices Thursday, will affect gas trading since natural gas is almost purely a domestic product in North America, one source commented. “We’ll probably see the most impact indirectly through oil prices, which have plunged so much this week that traders are talking about losing gas demand to fuel switching.”

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