Despite a screen plunge the day before and a generally weak fundamentals outlook, much of the cash market managed to level off Tuesday. Flat to moderately higher or lower pricing dominated at most points, although softness was a bit more pronounced in the West, where declines ranged as high as a dime or so in the Rockies/San Juan market.

Natural gas futures provided essentially no further guidance following Monday’s fall of nearly 20 cents, wavering slightly to either side of flat Tuesday, before eventually settling up 2 cents. The crude oil and heating oil contracts saw large losses on reports of overproduction by members of the Organization of Petroleum Exporting Countries, the dampening of near-term threats of war with Iraq, and the temporary shutdown of the Alaskan pipeline due to a Sunday earthquake.

An eastern marketer tried to explain Tuesday’s relative firmness by saying that despite the forecasts for warmer temperatures in many regions later this week, “the weather hasn’t changed all that much yet” and heating load was still fairly substantial for Wednesday. However, he didn’t expect prices to keep holding up as the weekend approaches.

A Calgary-based source said fundamentals seemed to be against overall market flatness Tuesday, so he had to assume that many people were anticipating a withdrawal in EIA’s storage report Thursday. Industry analysts Kyle Cooper of Salomon Smith Barney and Thomas Driscoll of Lehman Brothers are estimating drawdowns of 10-20 Bcf and about 30 Bcf respectively. Calgary-area temperatures were in the low 40s F. Tuesday and due to get warmer by the weekend, he said, which helped explain an intra-Alberta drop of more than C10 cents into the low to mid C$5.00s.

Contrary to the analysts’ predictions, however, a Mid-Atlantic marketer said that even with the chilly temperatures of this week and last week, he looks for net storage injections in reports both this Thursday and next. “It happens every year. November is an injection month. The demand is just not there yet and they are stuck with the excess gas. It is only natural to stuff it into the ground.”

A Northeast trader noted there was ice on the highways in parts of New England Tuesday morning, but added that area temperatures were predicted to go up to 60 degrees this weekend. She reported finding “a lot of market opportunities” at Texas Eastern M-3, but she wanted to sell at $4.43 and potential counterparties wouldn’t go any higher than $4.40.

Another Northeast source said M-3 started strong, then retreated late. “It seems like the spreads, both [Henry] Hub to market area and Hub to other Texas-Louisiana points, are contracting as the screen moves lower.” A Chicago citygate trader also said late prices were retreating there, but added there was so little volatility that it rendered the trend fairly insignificant.

A Florida utility buyer, who said he was scrambling to take care of an operational emergency due to the return of an Overage Alert Day notice on Florida Gas Transmission, commented that it made planning difficult when the offshore Texas pipeline MOPS says not to expect any interruptions from a pigging operation later this week, but FGT says market-area allocations are “likely” Thursday due to an expected shortfall in MOPS deliveries (see Transportation Notes).

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