Much of the cash market was essentially flat Monday, although Transco Zone 6-NYC and several Western Canada/Pacific Northwest points saw sizeable declines, while Rockies/San Juan numbers were up anywhere from a dime to about 30 cents. Otherwise it was rare for any point to vary more than 2-3 cents up or down from flat.

Several sources expressed surprise at how relatively firm cash numbers were in light of weakening weather fundamentals in key market areas. Although the southern half of the U.S. has hot enough weather to keep air conditioning load high, conditions have moderated considerably from last week in the northern half. Even Western Canada, which had been unseasonably cold recently, has returned to comfortable summer temperatures, a Calgary-based trader said.

A producer said he could detect “zero reason” for Gulf Coast pipes, especially Transco and Texas Eastern, to be slightly higher, when their market areas had shed so much weather-related load. Northeast weather, already fairly mild, is likely to be moderating further Tuesday, he said.

Nevertheless, the producer and others could not deny that prices held up for the most part despite fading weather load. And much like what happened last Friday, they expect the screen to have a positive next-day impact on prices. Natural gas futures, which had been a few cents in the red while cash was trading, reversed themselves and jumped in the afternoon to an eventual gain of a little more than 11 cents on the day. One trader said the gas screen ran up in sympathy with the crude oil contract, which rose to nearly $30/bbl after an official of the Organization of Petroleum Exporting Countries said OPEC should not vote to raise production at its meeting next month.

“I would think cash will at least try to track the screen higher Tuesday,” a marketer said. “Today’s turnaround in futures didn’t happen until cash had finished trading.”

The New York City market is always more volatile than most, a Northeast source commented. “Even on an inactive day it will move 15 cents. It was fairly weak today, with temps coming off tomorrow.” He noted that Zone 6-NYC’s continued dive left it averaging less than a dime above Zone 6 (non-NYC) and Texas Eastern Monday, a far cry from the times in recent weeks when the NYC pool has commanded multi-dollar premiums. “A lot of utilities can take either pipe and will buy the cheap gas to sell the expensive, which is causing the points to come together,” the source said.

September continues to be priced at a premium to current swing quotes, a couple of sources said. One who did Sumas deals for next-day flow in the mid to high $2.00s, reported trading Sumas for September in the high $2.20s. Another who quoted next-day intra-Alberta in the low C$3.00s said September deals had started the day in the high C$3.20s, but went as high as C$3.50 while the screen ran up.

A Rockies trader observed that although the region realized gains overall, prices were fading as the morning went on. His first Kern River-Opal deal was in the mid $1.60s, but numbers had dwindled to the high $1.30s by the time he had finished.

One western trader had this to say about NGI‘s editorial Monday (see Daily GPI, Aug. 19) on FERC staff’s suspicion of “manipulation” of published California gas prices from late 2000 through mid 2001: “FERC should realize that what we paid for gas in California was very real at that time. What they’re saying is that everybody who sold gas at the border was charging too much. Nobody had a gun to their head making them pay those prices, but if you had to run your power plants, you paid whatever you had to for gas. It’s nice to say you should have just paid the San Juan Basin price plus 30 cents or so for transportation, but nobody would have supplied you at the border for such a price.”

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