Daily GPI / NGI All News Access

Short Covering, Big Withdrawal Help Buoy Cash Prices

Short Covering, Big Withdrawal Help Buoy Cash Prices

"Dead" was the popular word used by traders to describe the stagnant cash market Thursday, where prices showed very little, if any, change from the prior day. Most sources believe that short covering is the main factor helping cash maintain current price levels amid the lack of any meaningful fundamental support.

"The market is pretty much being held up" because most market players didn't buy much baseload gas at the beginning of the month and they're getting caught right now trying to cover their positions, said one marketer. "We're getting close to the end of the withdrawal season, so storage deliverability is lower. These [shorts] can't pull out of storage as hard, and they have to buy on the spot market." He expects the latter scenario to continue through the end of the month, keeping cash relatively stable despite the lack of fundamental support. "We have no weather, and we have huge storage inventories. This means the cash market has no reason to spike with the exception of support from these shorts."

Another marketer, however, said the AGA storage report this week provided some help in preventing a price collapse, despite the lingering 355 Bcf storage surplus compared to the same time last year. The report showed the highest withdrawal for any week since January and almost double the previous week, he noted.

Chicago prices started in the upper $1.70s, but after a push toward the $1.80 level, they turned back, according to one Chicago-based buyer. Late bids at the citygate were seen in the low $1.70s, he added. "Chicago prices could continue to lose ground for the rest of the month, but there seems to be good buying support when prices dip into the middle $1.60s."

The Rockies market was largely flat for the conclusion of the day, according to an area trader. "In some cases, we paid higher prices [Wednesday] than we did [Thursday]," he added. The trader said that Questar declared an Operational Flow Order (OFO) due to high inventories on the system. "It is 65 degrees out here and there's too much gas that can't find a home."

©Copyright 1999 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1231
Comments powered by Disqus