Softening

The softening that had begun in late trading Monday carried overto Tuesday’s activity, but the path back down wasn’t as steep asthe climb up.

That softening that everybody was expecting in vain since thestart of last week finally showed up to start off this week. Mostdeclines were in the neighborhood of a dime but generally were lessthan that in the West, especially California, and much greater thanthat at Northeast citygates.

Holiday weekend prices fell as expected throughout most of thecash market Wednesday, but it was hardly the meltdown that sometraders had thought possible late in the previous week. Except forthe Southwest basins and California, few points fell by any morethan a dime, and most of the Gulf Coast, Midcontinent and Rockiesdeclines were about a nickel or less.

There was decided regional divergence in Tuesday’s swing pricemovement. The Gulf Coast and Appalachia/Northeast, being the areasstill affected most by unseasonably warm weather, ranged from flatto down as much as a dime. But from the Midcontinent westward,where it actually seemed a bit winterish behind a cold frontheading east, prices were flat to a few cents higher, with theRockies, Southwest basins, California and intra-Alberta seeingincreases of about a nickel or more.

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.

After prices nose-dived during September’s first three days oftrading, a number of traders thought they would never get back toindex levels during the month. Then after steady increases in theweek after Labor Day put quite a few points around or near indexesagain, there were those who said prices were likely to weaken butcertainly wouldn’t plunge to those early-September depths again.

The cash market emerged from the July 4 holiday weekend with astrong performance in which prices ranged from flat at some pointsin the Gulf Coast and Midcontinent to nearly 20 cents higher inCalifornia. The West made a remarkable recovery from last Friday’ssteep dives, reclaiming nearly all of the ground it had lost. Aheat wave over the eastern third of the U.S.-especially acute inthe Northeast-kept prices firm in the producing and market areas.

The typical slump in gas demand that accompanies a weekend wasable to coax a smidgen of softness out of the cash marketFriday-but just barely. Flatness was the word at quite a fewpoints, and decreases at others only rarely exceeded 2-3 cents.Sources continued to remark on how relatively stable the marketfeels even when prices come off a little.

Prices for the concluding weekend of February maintained thesoftening trend that had started earlier in the week, ranging fromflat to a little over a dime lower. And although swing gas tradedFriday for today’s flow only was flat at a few points, most sourcesagreed that the initial March aftermarket was trending downwardoverall from both bidweek indexes and weekend levels.