Oil, Gas Futures, Tighter Supplies Boost Market
"Where has all the gas gone now?" asked a Houston-based marketer
Tuesday as April numbers turned upward going into the home stretch of
bidweek. He was starting to encounter some tightness of supplies in
the Gulf Coast and Appalachian production areas that caused prices to
be bid higher. Echoing a producer's Friday observation (see Daily GPI, March 29), the market suspected
that reduced drilling budgets last year may be reflected now in a
firmer gas market.
Fundamentals were even weaker than before as mild weather
permeated most of the nation Tuesday, but sources cited strong
increases in the crude oil and natural gas futures trading pits as
supporting the rises for both April and last-of-March gas.
A Canadian producer noted, "We expected a bullish bidweek, but
not as bullish as it turned out to be. As a producer, we'll take
it." His Chicago citygate sales began in the low $1.80s but got as
high as $1.91 in a late deal.
A marketer said Rockies prices pushed up almost 8 cents for
April Tuesday, adding, "Nobody here was ready for it." A cold front
is expected in the West during the first five days of April,
boosting current regional demand, he said. "But after the weekend,
when things warm up, storage gas starts getting cycled and some of
these winter term contracts start ending, we are going to see
incremental prices come off.
One trader reported buying nearly all of his Southern California
border gas at GPI's index "minus anywhere from a penny to a penny
and a half." But after border quotes popped up into the low $1.80s
Tuesday, he was able to re-sell a package at index plus a penny.
A marketer was confounded by the fresh price strength.
"Fundamentally the gas market is still very weak," he said. "We may
have one more strong storage [withdrawal report] this week, but
that's got to be it; it's about time to start injecting pretty
Despite a general lack of heating demand, quotes for the last
day of March ranged from barely higher to about a nickel up.
Traders continued to cite nuclear plant outages in the West and
generally strong power generation demand elsewhere as responsible
for cash's bull market.
Several sources are expecting a very slow Thursday prior to the
Good Friday holiday, saying many of their trading partners are
looking to make April 1-5 swing deals today.
Referring to the "Melissa" computer virus that has brought many
corporate e-mail systems to their knees recently, a utility gas
buyer had this take: "We didn't get hit by any viruses, but the
flood of messages we got [from information technology managers]
about viruses may have been even worse."
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