It didn’t take long to eclipse what had been the lowest-everprices for a December date recorded by Daily GPI, and the new lowmarks weren’t even close to the ones seen earlier in the week.Continuing record warmth in the eastern two-thirds of the nationyielded record low gas prices for this time of year. Gulf Coastnumbers were almost a dollar under December indexes only three daysinto the month.

To producers, the situation was unnervingly reminiscent of thenotorious late-January bidweek in 1992 that produced Februaryindexes straddling the $1.00 level in all producing areas exceptAppalachia. One of the major differences was that super-weak marketoccurred near the end of the heating season, while this timeheating season has barely begun and has yet to generate much in theway of heating load.

Another difference was that in February 1992, Gulf Coast priceswere still at a premium, albeit a modest one, to those in theRockies and Southwest. But on Thursday it was the Gulf Coastscraping the bottom of the price barrel, especially at Louisianapoints where most quotes were in the $1.10s. Gulf numbers sufferedfrom their dependence on the extremely mild East Coast as a primarymarket.

Although prices fell across the board, again it was Westernmarkets that tended to see smaller declines. “They say the West isthe best, and it sure is [price-wise] at this point,” a marketersaid. “It looks like the farther east you go, the lower theprices.”

The PG&E citygate finally was recording its first sub-$2quotes of the December aftermarket Thursday, and the intra-Albertamarket fell well below C$2 for the first time this month. Albertaprices were being dragged down by the weak U.S. market, sourcessaid, and the lack of demand from a warm Midwest was backing gas upin the province.

Obviously those who had felt during Wednesday’s plateauing ofprices that there couldn’t be any market downside left were wrong.One source attributed the new plunges to the AGA storage report,which came too late to affect cash trading Wednesday.

“I’m just trying not to be the first one to sell gas under abuck for the weekend,” said a Houston trader. He didn’t think cashwill go under a dollar, “but there’s an awful lot of gas outthere.” An Oklahoma source agreed that things “could get reallyugly” in weekend pricing.

One producer said, “Every pipeline and their brother has got anOFO on,” but that wasn’t quite true. As of mid-afternoon Thursdayonly CIG and Northern Natural among the major lines had an OFO (orits equivalent) related to excess supplies in place; however, atleast a dozen others were either warning of OFO potential or hadimplemented constraints to prevent the need for one.

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