The cash market paid little heed Wednesday to a winter storm moving into the Southeast and bringing snow to areas that rarely ever see the white stuff. Instead, it concentrated on the futures declines of Monday and yesterday, and the increasing switch to using storage in lieu of buying new supplies, in sending prices down by double-digit amounts at nearly all points.

A large majority of the declines were between about a dime and 30 cents. Relatively mild weather along the West Coast and in the desert Southwest caused western points to absorb most of the larger price hits. A high-linepack OFO by PG&E (see Transportation Notes) also tended to dampen western demand.

Transco’s Zone 6 pool in the Northeast was drawing attention again because of a $5.75 peak quote in the New York City section of the pool and because the non-NYC section was Wednesday’s only firmer point, rising more than 35 cents. A marketer explained that snowy weather from the Mid-Atlantic states down through Georgia was causing heavier than usual demand in Transco Zone 5. “That drove up prices in [downstream] Zone 6 because the buyers there had to bid higher in order to get the Transco deliveries beyond Zone 5.”

The marketer also said that “some [expletive deleted] put out a 100-dekatherm offer at $5.75 for Zone 6-NYC gas.” Because the volume was so small, the trader making the offer “didn’t really get hurt all that bad, but I guess he got a cheap thrill just from seeing the $5.75 print.”

News of the southern snows aroused speculation about the possibility of wellhead freezeoffs becoming a market influence. However, traders in the Gulf Coast, Midcontinent and Rockies production areas told NGI that they were hearing no reports of freezeoffs. “That’s not to say it’s not happening,” said the Rockies source, “but no producers are calling me to say I can’t get their Rockies gas after all, because the wellhead is encased in ice.”

Prices were falling almost everywhere, mainly in response to futures slippage both Monday and Wednesday, even with a winter storm invading the South, a trader in the region said. A number of his colleagues had left early “because we’ve got big snow here. Actually it’s not all that big, but in [our city] any snow at all is ‘big’ snow.”

A Midcontinent marketer agreed that cash was following the screen’s lead, but added that traders also were looking ahead to warming trends due to start next week, particularly in the Midcontinent and Midwest. “Also, we’re seeing evidence that utilities and end-users are following through on bidweek reports that they would be using storage much more during January.” The market did detect one little note of relative firmness, reporting that Panhandle Eastern baseload “was hanging in there today, staying in the $2.35-36 area for rest-of-month deals.” That’s about where Panhandle Eastern swing averaged Wednesday, he noted.

A Calgary-based source reported above-freezing temperatures in her area. Told that Houston was due to experience a hard freeze overnight, she laughed and said, “What’s wrong with this picture? Houston freezing and Calgary not? Maybe El Nino has returned; that’s what everybody blamed when any oddities occurred a couple of years ago.”

A producer and a marketer both remarked on how quiet the post-New Year’s market was. “It seems like some in the trading community haven’t gotten back yet from holiday vacations,” the producer said. Another marketer said she had entered January with basically flat supply positions at all her normal western trading locations, and thus expected to do few if any daily deals this month. “Guess it’s time to get busy on the forward months,” she said.

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