Mild weather and a weak futures screen combined to drop cashprices early for the second straight trading session yesterday. Butunlike last Friday, there was no late rally in the futures screento spark an afternoon rebound. The Northeast and Midcontinentexperienced the most significant drops, with many points in the tworegions falling more than a dime. Some western points avoided thegeneral weakness, with PG&E climbing almost a dime and theSoCal Border and Opal rising a few cents.

The weather across the nation, however, was at the forefront oftraders’ thoughts. Monday represented the third straight day that”a good portion” of the U.S. saw record warmth, according to theWeather Channel.

One Gulf Coast trader said the bottom is in sight, however. “Ithink we will see a limit to the drop come soon. If prices get toolow, which they are in danger of doing, buyers will come out andinject the gas into storage. I don’t know how far that will takeus, seeing how we’re at 90%-95% full, but the prices will be toohard for people to resist.” He quoted ANR Southeast trading in themid $2.50s, which is down a few cents from Friday and more than 40cents off its index price.

For the third straight day, cash points on NGPL finished withsignificant losses. NGPL Louisiana fell more than a dime and NGPLMidcontinent fell significantly as well. “Because ANR and Tennesseeare commanding a premium to NGPL there are constraints onto thosepipes off Stingray,” a Gulf trader told NGI.

“It’s way too warm out here and there is absolutely no market,”a Midcontinent source said. “It’s in the 80s in Omaha, NE, and theforecast is calling for mid-70s for most of the week. The good coldspell needed for a boost isn’t anywhere in sight.” Another sourcefocusing on the Midcontinent said a Midwest utility was a buyer inthe field rather than at the gate because of the warm temperaturesin the Chicago area. The lack of demand in Chicago was so bad thatanother utility actually was loaning term gas back to the market.

Kern River, Northwest and CIG prices avoided major price dropsyesterday as maintenance work continued to be done (see Daily GPI, Nov. 8). These points stayed flat whileother Rockies points fell between a nickel and a dime. Unplannedmaintenance on the KN Interstate system at the CIG/KNI Weld, whichwill continue through gas day Thursday, has cut the flow at the pointto zero. KN is also not scheduling any nominations during theoutage. Williams Energy Field Services’ work on Kern River hasaffected volumes flowing from Opal.

In California PG&E lifted its weekend-long high inventoryOFO, causing prices to jump significantly. One western source saidPG&E’s rise, along with the increases seen at the SoCal Border,were not unexpected. “The California market is soelectricity-based, and electric demand just goes away during theweekend. After the hit those two points took last Friday, itdoesn’t surprise me that there was a bounce [yesterday.] Does thatmean there is real strength out in California? I don’t think so.PG&E is still 40 cents below its index level.”

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