Weekend

Prices continued to soften Friday but except for some steepdrops in the West, the weekend declines were considerably smallerthan many traders had been expecting.

It is a trader’s rule of thumb not to go home for a long holidayweekend with a large long or short position because of thepotential for fundamental or political forces to produce a severeprice move when the market reopens. Yesterday’s energy complex wasa textbook example of this rule.

Weekend prices were moderately higher in the East Friday but offa few cents at most western points as last week’s troublesome heatwave in California continued to subside. Nearly all areas wereseeing lower numbers in late trading, sources said.

The cash market managed to rebound Monday from the weekend’smild softness, but the bounce back up was small. Monday’s quotesranged from flat to almost a dime higher, with most of the upticksless than a nickel.

Prices emerged from the weekend to move higher in fairly quietactivity Monday, mostly in amounts of a nickel or less. Theoutperforming points were concentrated in California and theNortheast.

Florida Gas Transmission lifted Thursday an Overage Alert Daynotice (see Daily GPI, March30). However, a weekend pipe replacement project between Stations12 and 13 in north-central Florida will limit market area deliveriesto 1.15-1.25 Bcf/d, down from the normal 1.4 Bcf/d. Thus the pipelineis reinstating the OAD notice for today through Sunday. The tolerancefor negative daily imbalances will be 6% today and tighten to 4%Saturday and Sunday.

Despite a positive open and stronger cash prices, natural gasfutures slumped into the weekend as traders surveyed the prospectof more bearish news this next week in a market that many feel isalready overvalued. After opening at $2.81 the prompt contract wasunable to muster much in the way of upward momentum, and that setthe tone for a choppy, range-bound trading session. April finisheddown 1.2 cents at $2.774. Estimated volume confirmed the lacklustertrading, as only 43,848 contracts changed hands.

While winter weather finally made an appearance in the Northeastand Midcontinent last Friday, major price movement in most marketareas did not. Sources in the Midcontinent and Northeast citedweather forecasts calling for major temperature warm-ups for thisweek as the major reason for the market’s inability to rise.

First-of-month swing prices were down from the weekend buthandily above February indexes Monday. As further proof that theaftermarket was getting off to a strong beginning, a marketerreported seeing Henry Hub swing swaps trading at $2.67 while thescreen was at $2.61. “That premium of 6 cents was very strong,” hesaid.