Sources

Several sources said they had no clue whatsoever on how the cash market achieved flat to modestly higher prices in most cases Thursday in the face of weakening fundamental support, especially following what they regarded as a bearish storage report. A large majority of points ranged from flat to 2-3 cents higher, with most Northeast citygates seeing the day’s only declines of about a nickel.

It didn’t make sense to a number of sources, but there it was: prices going up Tuesday everywhere except at Northeast citygates even as generally weak fundamentals continued to get even weaker. Not counting the Northeast, quotes rose by a nickel to about 20 cents across the board.

As sources had predicted, mild softness dominated Thursday’s cash market. Some points were flat, and a large majority registered declines of about a nickel or less. Only a few scattered points saw drops of about a dime or more, and several of those were associated with the Chicago market.

What several sources believe may be an extended period of slow, often featureless and softer cash trading was launched Tuesday with all points on the same falling price page. Trends were more consistent across the entire market, with a large majority of points registering declines from a little less than a dime to about 15 cents. More modest drops tended to occur in non-Permian Basin western markets, while larger losses were recorded in the Northeast.

A couple of sources thought Monday’s trading might have established a flexible template for much of October: softening at nearly all points that was fairly moderate at about a dime down, or less in most cases, and accomplished amid quiet activity. Fundamentals were still weak; although virtually all areas basked under sunny skies, temperatures are still mild to chilly everywhere except in the desert Southwest and the Florida peninsula.

Continuing his nonstop photo opportunities to flip the switches on new electric generation sources, Gov. Gray Davis Monday opened the 90 MW Larkspur Energy Project, built by InterGen and billed as the largest natural gas-fired power plant to come on-line in San Diego in more than 40 years. InterGen also signed an 11-year contract with the state for the plant’s output.

The cash market began what several sources believed could be a fairly lengthy period of downward price consolidation Wednesday. Numbers generally fell between a dime and 20 cents in eastern markets and at Permian Basin/Waha and Pacific Northwest points, while other western prices took an even heavier beating.

As some sources had suspected, the recent buildup in air conditioning load wasn’t strong enough to sustain this week’s bull market in the wake of another big storage injection report and associated screen softness. Only small to moderate Rockies/San Juan increases went against the grain of overall market declines Thursday that were mostly between a dime and 30 cents but got as big as nearly $1.50 for California border deliveries into SoCalGas.

As work moved forward Tuesday on two new power sources to come on later this summer, the outlook in the immediate two months darkened with no apparent comprehensive solutions emerging from the state legislature.