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Softening Most Severe in the Midcontinent
While yesterday’s price weakness did not surprise many traders,the size of some of the declines exceeded expectations. Near recordhigh temperatures caused major drops in the Midcontinent, andforecasts of hot weather combined with a dropping futures screen toweaken the Northeast, Gulf Coast and western markets.
“Right now, almost no gas is being moved,” oneMidwest/Midcontinent region gas trader said. “We’re nearing recordhighs all over [the Midcontinent], and that is causing thepotential for some system underrun limitations on Northern Natural.It’s shaping up to be like last winter. There is little deal flowand prices are tanking.” Both Northern Natural’s Ventura andDemarcation points fell from the mid $2.70s Wednesday to the low$2.60s yesterday.
Prices in Chicago also took a big hit yesterday, the tradersaid. With nothing being pulled by downstream pipes, gas is justbuilding up “fast and furious.” The citygate dropped more than adime while Consumers Power and MichCon experienced similar losses.
The weak Midcontinent points did not help Rockies prices, asthey were also down from Wednesday. One Colorado-based trader, whoquoted Questar in the high $2.50s and CIG DJ Basin in the mid$2.50s, blamed the drop on Midcontinent softness combined with”everything else. There are nothing but negative influences outthere and I don’t see any reason for an uptick for another four orfive days at least.”
West Texas price points “tumbled,” according to one marketer, aslittle to no demand weakened the Waha Hub, and El Paso Permianprices fell from the high $2.60s to the low $2.60s in sympathy.
The Northeast finally ran out of steam after two straight dayswhere many points posted double-digit gains. The small cold frontthat had engulfed much of the region started to give way to highertemperatures yesterday, and the forecast for the weekend isunseasonably warm. One trader said because of the cold front,utilities overbought the past couple of days, and as a result, werenot active in the Northeast market yesterday. Only Tetco M3, whichfell a few cents over a nickel, escaped double-digit losses in theregion.
Intra Alberta prices have been weakening lately due mainly tolack of load according to one source. AECO finished the day in thehigh C$3.20s. “We need some real weather up here. It snowed brieflyin Calgary today, but temperatures aren’t low enough for me toconsider it real winter weather. When it’s really cold in Calgary,it’s too cold to snow.”
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