As anticipated, the bears regained firm control of the cash market Friday following a flat to mildly softer Thursday. They had little trouble in doing so, aided by the previous day’s screen dive in response to the storage report, unseasonably mild weather throughout much of the East, and the slump in industrial load that typically accompanies a weekend. Even a weekend burst of highs reaching the low 90s in parts of the Northeast was unable to avert drops of 20 cents-plus at regional citygates.

Declines of a dime to 30 cents were recorded across the board, with the softness spread fairly evenly on a geographic basis. Henry Hub and some other Gulf Coast points reached their lowest levels so far in 2003, but generally other market areas were still above their yearly lows. That was especially so for San Juan/Rockies points, which traded below $2 earlier in the year.

Sources see little chance of an overall rebound anytime soon. Western numbers may hold up somewhat in the coming week as that region retains a near-monopoly on very hot weather, but the more heavily populated East is due to experience below normal temperatures, according to the National Weather Service.

Never say die, at least in the case of Tropical Depression Six. Part of that system’s remnants came to life again Friday off the northern Florida coast under the designation of Tropical Depression Seven. However, TD Seven was of no concern to gas traders as it appeared most likely to bring rains to the lower East Coast instead of making a move on the Gulf of Mexico. As of 5 p.m. EDT it was about 45 miles southeast of Brunswick, GA and heading north-northwest at nearly 13 mph, the National Hurricane Center (NHC) said.

“There sure is not much in the way of promising bullish trends,” acknowledged a Gulf Coast producer. “No storm action; almost no heat even. Even in the South there aren’t many hot temperatures. Houston is supposed to hit 95, but traders there seem to think it’s not even that hot. Humidity is playing a factor. Highs will be in the low 90s in the Northeast this weekend, but it will drop back into the 80s come Monday. So even though there is a little warmth, with no industrial demand Saturday and Sunday we look for prices stay down for the short term.” However, he expects a lot of switching from fuel oil back to gas as the gas numbers get down closer to $4 or so, “provided oil doesn’t make any big moves.”

For one marketer, the recent price downtrend has been largely a case of “people see we’re filling up storage faster than we thought, so they’re getting more bearish in that regard.” In a similar vein, a Northeast utility buyer said her company’s storage account is about 75% full, so they’re sitting pretty and don’t have to worry much about temporary price spikes between now and winter.

“Yeah, I’d call it a no-brainer,” said a Midwestern trader. “It was fairly obvious prices were going to come down for weekend flow. This past week has got to be giving bulls some pause. Some predicted the [Henry] Hub wouldn’t see costs below $5 for the rest of the year. I don’t have a solid feel for how things might flow come Monday, but right now the bears are winning. I’ll tell you what, though; if prices do continue to drop next week, I expect there to be a bounce back up.”

It was a “pretty quiet day” for one western marketer. He noted that PG&E linepack has been edging around the utility’s minimum target levels lately, but said PG&E has been supplying about 20% of its demand out of storage, which has helped avoid an OFO.

To no one’s surprise, initial bidweek activity was a low priority Friday. However, a marketer reported completing fixed-price deals in the low $4.50s for Panhandle Eastern and the high $4.30s for Transwestern-Permian.

People seemed more reluctant this time to do August business before Friday “because they didn’t think the numbers would get counted in indexes,” one trader said. Things seem pretty bearish going into the month, she added, “but I would hesitate to make a call on the aftermarket because we could still catch some bad heat waves.”

A West Coast source thought only a “smidge” of August business was getting done Friday, observing that plenty of trading time will be left this week.

An East Coast utility buyer said she hasn’t “had a chance to think about August yet. I need to check with our industrial customers about what they’ll need next month.” She echoed general trader opinion in observing that the August market is “looking weak pricewise at this point.”

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