With most markets either in or entering a thawing-out phase, a price retreat from the worst siege of weather in the overall mild winter of 2001/02 was in order Tuesday. Declines between about a nickel and a little more than a dime were most common. The biggest ones came at the points that had been soaring the day before: Northeast and Florida citygates. A minor OFO kept California numbers mostly flat.

Northeast delivered prices were falling as the morning went on, said a trader whose early Transco Zone 6-NYC deal at just over $3 yielded to later ones on either side of $2.90. However, a Gulf Coast marketer reported the opposite trend as his highest prices came later in the session. It’s not all that unusual for field vs. market trends to differ on any given day, he said, although they will eventually move in the same direction over time. He noted that Henry Hub cash gave up a small amount of price ground against the screen, but still maintained a premium of a little more than 15 cents.

Bad weather hadn’t disappeared entirely. A trader at eastern Canadian points said a particularly severe winter storm was still raging Tuesday in Ontario.

A generally flat natural gas screen during the morning gave no direction to cash traders. However, the crude oil and heating oil futures contracts made substantial gains due to a report of a larger than expected fall in gasoline supplies and escalating violence recently in the Middle East.

It was telling of the overall market that with Sonat and MRT lifting OFOs or similar constraints (see Transportation Notes), that left Florida Gas Transmission as the only eastern pipe with an OFO-like notice still in effect Tuesday.

In the West, PG&E issued a customer-specific OFO for today to combat low linepack. A marketer credited the PG&E order with keeping California prices flat to barely lower. He expects the OFO to be extended into Thursday — and consequently keep Golden State prices relatively firm today — since the utility continued to project linepack below its minimum target levels even after the OFO was posted.

Although the relative California strength helped keep price drops in the Southwest basins small at around a nickel, it didn’t have as much effect in the Rockies, which lost some of the cold-weather demand it had been experiencing from the Midcontinent/Midwest. Winter storm watches are in effect today for the Sierra Nevadas and other Northern California mountains, along with parts of Idaho and Montana. But CIG joined Cheyenne Hub in registering sizeable drops as Denver and the eastern Rockies in general were due for milder conditions.

Intra-Alberta prices fell C3-5 cents despite NOVA switching to zero tolerance for negative imbalances because of low linepack.

Virtually all sources saw little chance of a rally this week, except possibly a mild one in the West. “We’ll get some cooler weather again next week, but nothing like what’s been happening recently,” observed a Northeast marketer. “Just think; a month from now we’ll probably be talking about how hot it is.”

With a period of price consolidation apparently getting started, a Midcontinent marketer got analytical about the upcoming market. He sees cash in range-bound trading for a while, “but whether we go much lower isn’t quite certain. The market has been lulled by cool summers and warm winters in recent years.” Despite the concern expressed for a long time about huge storage inventories, he added, “the economy’s growth combined with falling production makes me doubt we’ll see anything close to a crash in cash.” He noted that his colleagues had been trading summer strip gas at index minus 2-2.5 cents, but now the discount had come down to minus 1 cent.

©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.