A day after major cash market losses that exceeded a dollar in some cases, traders stanched the hemorrhaging to some extent Wednesday with mixed price movement that mostly was a dime or less up or down from flat. Late quotes were rising, which a couple of sources attributed to short squeezes.

The market managed to slow down or halt its slide despite generally bearish short-term weather forecasts remaining in place and the normal weekend slump in load that was exaggerated by the weekend being four days long and the industrial slowdown that accompanies the Christmas season. Few regions were destined to have a white Christmas, according to The Weather Channel, and most precipitation that was expected would be of the wet variety.

Most of the declines of more than a dime occurred in the West, along with a few scattered points elsewhere. A high-linepack OFO with zero imbalance tolerance by PG&E (see Transportation Notes) helped depress demand in California, the Rockies and the Southwest basins.

However, for some reason the OFO, didn’t keep the PG&E Citygate from seeing a small gain, while the Southern California Border dropped about 20 cents even though SoCal Gas did not issue an OFO. Also somewhat curiously, an OFO-like System Underrun Limitation declaration for Friday and Saturday by Northern Natural Gas (see Transportation Notes) failed to have a negative effect at the pipeline’s demarcation point, which had one of the day’s larger upticks of about a dime.

“Some people played the game and got burned,” said a marketer in describing the “big short squeezes” that developed late in understandably quiet Christmas Eve swing trading for flows from Thursday through Monday. Another source agreed, saying it seemed that some traders began the day with a “dumping attitude” (that is, expecting Tuesday’s price rout to continue), then had to pay up after getting caught short on holiday weekend supplies. And a Gulf Coast producer mentioned lack of market liquidity as contributing to the squeezes.

One trader reported an early El Paso-Permian package in the high $4.70s that was followed by three more in the low to mid $4.90s. A Gulf Coast marketer said his Consumers Energy citygates in Michigan had topped out at $5.60 late after earlier deals on either side of $5.40. His Columbia Gas-Appalachia range spanned nearly 20 cents.

Many traders likely had already left their offices by the time the Energy Information Administration reported a storage withdrawal of 151 Bcf for the previous week. That left inventories still 159 Bcf higher than a year ago but 3 Bcf below the five-year average.

The 151 Bcf volume was around the high end of expectations, a Midcontinent marketer said, “and that gave January futures a little shot in the arm,” but he didn’t expect the Nymex firmness to last on Monday’s expiration day. What had been a negative screen prior to the report found succor in it, ending the holiday-shortened trading session up 23.6 cents. The petroleum-related futures contracts also realized strong gains, with crude oil for February rising almost a dollar to nearly $33/bbl.

Citigroup analyst Kyle Cooper’s initial estimation for the upcoming EIA report is for a withdrawal under 100 Bcf, which would compare with year-ago and five-year average figures of 123 Bcf and 161 Bcf respectively.

Despite what was expected to be a major dearth of active market participants Wednesday, a marketer found that “actually there were quite a few traders in this morning [Wednesday].” Of course, they didn’t expect to stay past lunchtime, she added.

It wasn’t much, but a little January business was getting done. One source said El Paso-Permian traded in the $5.40 vicinity for next month Wednesday, while Waha deals on Tuesday ranged from the mid $5.40s to the mid $5.50s. She was unable to perceive any trend from Tuesday to Wednesday, saying prices were “kind of seesawing.”

Otherwise it was “pretty slim pickings” for bidweek trading, a marketer said. “Monday will be the day” when a lot of January deals get done, he said. A western utility buyer concurred, saying, “Come Monday I’ll be trading as much as I can. If folks don’t get it done then, it’s not likely going to get done.”

©Copyright 2003 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.