The 2003 swing market opened Tuesday about as most traders had expected — with price softness. Generally the declines were fairly moderate at around a dime or less, although Northern California, Pacific Northwest and Western Canada points stretched their losses to 15-25 cents or so. Northeast citygates provided a rare note of firmness in anticipation of wintry weather remaining in upper New England and spreading to the rest of the region before the weekend.

Numbers started out weaker but stayed fairly steady for most of the morning before seeing some late small upticks as the screen began recovering, a Gulf Coast marketer said. For that reason he sees some chance of cash strength returning Thursday. Crude oil and heating oil futures were down slightly, with crude managing to stay above $31/bbl.

A Northeast utility buyer said there may be some fundamental support returning also. The holiday weather forecast was too mild for her to buy any new gas, “but it should turn colder by the weekend,” the buyer said.

However, the National Weather Service continues to look for a mostly mild early January. In its forecast for the Jan. 5-9 period, NWS expects below normal temperatures only in the southeast corner of the U.S. encompassed by Alabama and North Carolina, with a slim slice of normal readings separating that from the above normal temperatures expected for the vast majority of the nation.

But for a Texas-based producer, the NWS report wasn’t especially meaningful. “Which weather forecast are you going to believe?” he asked, referring to other predictions for colder temperatures, such as by consulting firm Weather 2000. “It makes it confusing when they can’t agree.”

Although it did not declare an OFO, PG&E projected that its linepack would rise above maximum target levels by Thursday. That helped suppress prices at Malin and the PG&E citygate, which recorded some of Tuesday’s biggest losses.

A Calgary-based marketer who found activity on the last day of 2002 “very quiet. And of course, illiquidity is still a problem.” He reported intra-Alberta numbers falling more than C20 cents into the low to mid C$5.70s despite the Calgary area receiving.snow, which he said means “we’re finally getting around to seasonal weather again.”

A marketer tended to agree about the market quietness, saying as far as he could tell, “There’s nothing but New Year’s [celebrations] on most traders’ minds.”

Bidweek business was already a thing of the past by Tuesday for virtually all traders. A producer said warm weather in Chicago (“nearly 60 degrees yesterday [Monday]”) was responsible for relatively weak bidweek pricing. “Usually you see January basis for Chicago at plus 12-15, and that is what next January is trading, but this year basis is either side of flat.” Looking ahead, high Chicago-area temperatures in the high 30s for the rest of this week are still normal to a little above normal for this time of year, he added. “Unless we get colder weather, I would expect prices to continue to tumble.”

A producer found it “interesting that Chicago found a range 4-5 cents behind Henry Hub, but there was no reaction to it. I think there were a lot of traders with gas who didn’t want to sell at these prices. They don’t want to sell lousy basis and have that affect the reminder of January.”

The producer continued, “The disconnects from last month went away so the Alliance, Peoples and Nipsco [citygates] were all nearly the same, which is very efficient compared to last month when they were all over the place. There were points then less than a mile apart with more than a nickel difference. We did a good job setting up our books so there is no stranded gas.” Fixed-price volume was lousy in Chicago because “everyone is trading indexed, basically letting someone else decide the market.”

Finally, one source had this comment about CMS being the latest energy merchant to quit the business: “How could energy trading work OK for most people throughout the 1990s and now all of a sudden it’s turned to [expletive deleted] for so many?”

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