In many cases cash prices were coming down Thursday about as fast as they had climbed Wednesday, and at some primarily western points Thursday’s losses were greater than the gains of the day before. A majority of drops were in the range of 30-40 cents, but overall they ran from as small as about 12 cents (Kosci) to nearly half a dollar (Transco Zone 6).

Much like the day before, Access futures trading from the previous evening pointed the way for cash to take Thursday. An overnight drop of a little more than 13 cents in the January contract set the market tone again, and prices fell fairly steadily after starting around their daily highs, sources said.

Just as Northeast citygates had recorded the biggest increases on Wednesday, they also tended to see the sharpest declines yesterday. A buyer who made his initial Transco Zone 6-NYC purchase in the mid $3.40s said he was able to pick up a late package at $3.10. Colder weather seems to have been overhyped in Wednesday’s run-up, he said. Temperatures in the New York City region were in the 30s Thursday, “and that’s not bad at all for this time of year.”

Indeed, the boost that the market had gotten immediately after Christmas from a wide-ranging spell of frigid weather and snowstorms appeared to have vanished. Although the cold is expected to remain in the eastern U.S. until nearly mid-January, according to the National Weather Service and a couple of noted private-sector meterologists (see related story), buyers didn’t seem to see it as a supply threat, a Gulf Coast marketer said.

Utilities and end-users can easily afford to ignore a siege of winter weather considering that storage stands at 90% full well into the traditional withdrawal season, the marketer went on. AGA said Thursday afternoon that 81 Bcf had been taken out of storage facilities last week, a volume that met or moderately exceeded most prior expectations. But as one analyst commented, “It [withdrawal volume] doesn’t really matter anyway.” As expected, the latest report leaves the year-on-year surplus above 1 Tcf.

PG&E citygates were pressured by a high-inventory OFO (see Transportation Notes) but still fell only about 30 cents, among the day’s smaller losses. A marketer said that kept PG&E’s system storage in injection mode, estimating that 80 MMcf was inserted Thursday and another 200 MMcf will be injected today. Meanwhile on the opposite coast, Florida Gas Transmission was under a low-inventory OFO-like Overage Alert Day notice due to freezing weather in its market area.

Further softness is in store today, most sources agreed. They noted that much of the screen’s expiration-day dive of 35.6 cents occurred after cash trading was finished. In addition, although many people will be working at least half a day or so Monday, the fact that it’s New Year’s Eve will make this weekend seem like a near-holiday period, enhancing the usual demand drop of a weekend, the sources said.

A marketer said many of his trading partners indicated that their deals today will be for flow through Jan. 2, so Monday’s market is likely to be minuscule.

Many had expected Thursday to be the heaviest day of bidweek activity, but it actually remained rather quiet, a couple of traders reported. That’s largely due to a lot of utilities saying that between their winter term deals and maximum storage withdrawals, they just don’t need any new gas for January, one said. “From the looks of production deliverability and storage, we won’t have any supply problems even with a 10% colder winter,” he added.

Besides the buying reluctance of LDCs, it’s also power generators that are stifling bidweek business, a western trader said. “Right now conditions favor them buying third-party power and selling gas.”

Basis failed to move much, so naturally the plunging screen carried January prices significantly lower. One source said border-SoCalGas supplies were trading at $2.60 Thursday morning but had fallen into the mid $2.40s by early afternoon.

A marketer exemplified the depressant effect that bulging storage inventories increasingly will have on prices as the weeks pass. “We have very rigid rules regarding withdrawing. We have to get rid of our storage between now and April. This puts us in quite a bind.” He added that there is no reason for Henry Hub cash to get above $2.50 next month “unless some serious Ice Age weather comes in.”

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