The gains made earlier this week were not sustained yesterday asmost points on GPI’s Daily survey lost between a couple cents and adime. Spot points in the Midcontinent, California and the Rockieswere the exception, however, as most registered flat to decreasesof just a penny or two; some even managed small increases.

The feeling among sources yesterday was that market softnesswould be short-lived. Many pointed to the American GasAssociation’s storage report of a 31 Bcf withdrawal as a bullishindicator. One source noted that as soon as the report was issued,the futures screen shot upward. While this occurred too late forthe cash market, the trader said he believed prices would reboundtoday.

One Sonat buyer said prices took a dip on that pipelineyesterday into the mid $2.70s after trading in the low $2.80s onTuesday. Despite the setback, he felt confident of a return intothe $2.80-range today. “Both Sonat and the Hub have been trading 3to 5 cents below the screen lately. With this late run up, I’dexpect to be back in the $2.80s [today]. Even in the $2.70s,though, [prices are] very strong for Sonat at this time of year.”

Out West, one source quoted Malin in the mid $2.70s andStanfield in the mid $2.60s. He said one main reason for the West’sability to avoid bigger drops was the price strength at AECO, whichposted a slight gain for the day. “AECO leads the West and it wasstrong today. That’s what probably led to the strength we’reseeing.”

PG&E Citygate prices might have been stronger, anotherwestern source said, but the point traded lower after an OFO on thesystem was extended through today (see Transportation Notes).

Snow was reported in some areas of the Rockies yesterday, butsources agreed weather had little to no effect on prices in theregion. One CIG trader reported prices on that pipeline in the high$2.40s, while Opal traded in the mid to high $2.50s. “There is alot of coal-seam production coming out of Powder River now [goinginto CIG]. That is why CIG prices are depressed relative to otherRockies pipes,” the trader said. “And that extra gas is spillingover into Northwest and showing up at Opal.”

Despite yesterday’s price drops, a Northeast trader said he wassurprised how strong prices were. “We are selling gas hand overfist to meet our minimum storage level of 30% by March 31.” But thepotential for high refill prices as evidenced by the summer stripis making him cautious not to withdraw too much gas. “We are goingto try and hit the 30% level right on.”

Looking ahead, a Houston-based trader feels the key to cashprices heading into the weekend will be whether the market sideswith the bearish National Weather Service (NWS) six- to 10-dayforecast or the price supportive weekend weather outlook. There isa cold front moving into the Great Lakes and Northeast beginningtoday and that should boost demand in the short-term, he said.Conversely, the NWS report showed a large chunk of the country,including the important Midcontinent and Northeast markets, willexperience much above-normal temperatures next week. The trader,however, is bullish for the next couple of days, saying the markethas tended recently to side with the short term outlook.

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