A bit of strength in the Rockies and New England citygates was more than offset by flat to mostly moderate year-end declines in other markets Monday. Although some of the softer points saw double-digit dips, a majority fell by less than a dime.

A Midcontinent trader noted that Jan. 1-2 prices face a triple whammy: Monday’s Nymex dive of more than 20 cents, little in the way of very cold weather and low holiday demand. He and others sounded confident in predicting further price drops Tuesday.

Natural gas also started to lose any psychological support it might have been receiving previously from oil market strength. After an early spike to as high as $33.65/bbl, crude oil futures eventually plunged more than a dollar to settle at $31.37 after an official of the Organization of Petroleum Exporting Countries gave further assurance that OPEC would raise production in January to make up for the loss of exports from strike-ravaged Venezuela. Nymex’s heating oil contract also took a large hit.

New England and the upper Rockies were among the rare areas expected to have freezing and snowy/icy weather for New Year’s Eve, so it seemed appropriate that they resist the overall price downturn. Northern Natural’s Minnesota market area also is likely to see wintry conditions, and the pipeline’s demarc and Ventura points were essentially flat.

However, one source that Western Canada continued to experience above normal temperatures Monday, “and it’s pretty much been that way most of the winter.” That may have been “an El Nino thing” when you consider the bad weather back East, he added.

“This is chaos,” said an eastern trader. “Lots of traders don’t want to come in tomorrow [Tuesday], so people are trading for the end of the month, for bidweek, and though the 2nd [of January]. Things are all over the place so when you’re talking on the phone and taking quotes, you might have no idea what time period you’re talking about.”

Analysts Thomas Driscoll of Lehman Brothers and Kyle Cooper of Salomon Smith Barney were closer together on their storage report estimates than in previous weeks. Driscoll looks for a withdrawal of “about 130 Bcf (20 Bcf below our previous estimate of 150 Bcf due to warmer than expected weather)” compared to 126 Bcf a year ago and a five-year average of 151 Bcf. Cooper followed his final prediction of a 129-139 Bcf range with this clarification: “Confidence this week will be low after witnessing a dramatic shift in the relationship of the actual report in relation to the models last week. Last week’s report indicated a rather dramatic change in the relationship of the actual reports to model estimations and resulted in our estimation being high for the first time in many weeks. Thus, what could be just a one-week phenomenon combined with the Christmas holiday leaves a low confidence level for this estimation.”

A western source reflected the downward track that bidweek prices have taken, reporting a Sumas deal on Christmas Eve in the mid $4.50s and another package Monday in the low $4.20s.

A buyer quoting San Juan Basin WACOGs for January only a dime apart in the Blanco and Bondad pools said he was not sure why they had moved closer together, but there definitely used to be wider spreads. As recently as last weekend the pools were more than 30 cents apart.

The interesting thing about the January market for one power generator is that basis rose as the screen fell, which he said “is counterintuitive considering that as the price of the commodity falls, so does the variable fuel charge.” He added that most people were done with bidweek trading last week, and the only market that he saw still substantially active Monday was Henry Hub, which he pegged in the low $4.80s, roughly 17-20 cents back of the January screen settlement.

Looking ahead, a Gulf Coast source commented, “If you believe that we are not producing as much gas [as before], we are going to blow right thought storage. But then what is up with that? You’ve got to take into account who is telling you what. Can you trust the producer who says there are no more wells? Every trader needs a marketer, a producer and a end-user. Then you might have some clue as to where the market is going.” He went on to lament that CMS is shutting down it trading office in Houston. “Trading wise they are done. And so there is even less liquidity. Every time I think we hit bottom, it falls out underneath us.”

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