Prices continued to sink Friday, but by significantly smaller amounts than the day before. Declines mostly ranged between a nickel and 15 cents, but were larger in California largely due to milder weather in the state. A majority of the price drops were in the vicinity of a dime.

Sources said the reasons for the softness were obvious: unusually light air conditioning load for late August; reassurance from the latest AGA report that storage remains on track to become full well before the end of the traditional injection season; a weaker screen; and the usual demand slump of a weekend period.

Nobody was looking for a rally of appreciable size any time soon. As one utility buyer put it, “It looks like one Ursa Major [Latin for ‘big bear’] fest for the foreseeable future. The only think that could break this [softening trend] is sustained heat, and maybe not even that. But I felt this market was unnaturally high, and now we are coming back to where it probably belongs.”

A Northeast trader confidently expected prices to keep going lower this week, saying supportive weather fundamentals will still be lacking in most markets. “I can see the screen getting down to the $2.50 area,” he said.

Although no OFOs were in effect going into the weekend, Sonat said Friday it has seen “a significant increase in supply with little corresponding increase in demand.” An OFO Type 6 was unlikely Saturday for long imbalances, but was too close to call for Sunday and today, according to Sonat. Florida Gas Transmission was warning shippers of a potential Overage Alert Day notice over the weekend. And due to high linepack, NGPL was limiting balancing services from Saturday through today.

A marketer reflected consensus opinion that market activity was very subdued Friday. He saw little Chicago citygate movement from the mid $2.70s, saying it popped up a little but then eased back again.

A lack of OFOs kept things pretty static out West, according to one source. The PG&E citygate saw Friday’s biggest drop of about 30 cents because the utility was projecting weekend linepack near its maximum target level. “Nymex’s late tumble to more than a dime lower, after being down around a nickel for most of the day, makes me think the market outlook is even more bearish than it appears on the surface,” the source said.

Most traders said they had not initiated any September business yet, although one said he was hearing some “tire-kicking talk.” A couple of marketers said Chicago basis looks flat and that indexed citygate deals were likely to be at a discount of 3-4 cents from index. An aggregator reported being grateful that bidweek “will be a nice and tidy Monday-Friday affair with no weekend interruptions.”

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