Traders had realized that a belated stretch of severe winter weather throughout much of North America was the only thing keeping spot prices firm since the end of January, so it was purely a matter of “when” a market retrenchment would begin. The “when” turned out to be Wednesday, as across the board declines were topped by plunges ranging up to slightly more than 70 cents (Algonquin citygate) in the previously high-flying Northeast.

The overall price downturn was fairly moderate at less than a dime. But Florida citygates joined the Northeast in sizeable double-digit drops. The Florida softness occurred even though Florida Gas Transmission issued an OFO-like notice for its market area (see Transportation Notes). However, in a sign that seasonal chill is starting to ease up in the Southeast, Sonat is canceling its own OFO today.

More than one cash trader looked askance at Nymex when it closed up nearly 3 cents after digesting what was regarded as a decidedly bearish storage report. AGA said 82 Bcf got withdrawn last week, which was both at the lower end of prior expectations and increased the often-cited year-on-year surplus again, keeping it substantially above 1 Tcf.

A marketer expressed surprise that the screen could wind up near its daily high “after such a small AGA figure.” But to another source, “it doesn’t really matter what Nymex does following a storage report. They’re just as likely to be heading down again tomorrow.”

There was general agreement that with the ice storms, snow and frigid conditions that have covered most of the market landscape for nearly a week starting to depart, there is nothing to prevent prices from eroding further. Softening could last at least through all of next week, said one source. He noted that Wednesday’s latest six-to-10-day forecast from the National Weather Service calls for above normal temperatures from the Rocky Mountains eastward throughout the U.S. except for normal readings in the extreme northeastern and southeastern corners. Most of the West should be normal, NWS said, with only most of Washington and the northwestern quadrant of Oregon due for below normal thermometer levels in the Lower 48 states.

PG&E citygates were only about a nickel down yesterday. But a marketer observed that warmer weather in its service territory had allowed the utility to cut back tremendously on system storage withdrawals. Whereas PG&E had been pulling 1 Bcf/d or more from storage as recently as last week, he said, it’s now projecting usage of 100 MMcf/d or less through the weekend.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.