East Prices Softer While Chilly West Hangs Tough
The East-West divergence in price tendencies was repeated again
Tuesday in a slightly different way. While Monday's overall upticks
had been most pronounced in the West, eastern markets retreated by
about a nickel Tuesday as Western markets managed mostly flat to
Western sources continued to cite colder-than-normal weather as
reasons for the relative price strength in their region. PG&E
citygates even managed a small increase largely due to a
low-inventory OFO by the utility in effect today (see
Transportation Notes). "It looks like we're trading in El Paso's
OFO [the pipeline suspended an Unauthorized Overpull Penalty alert]
for PG&E's OFO," a trader remarked. Sources noted continued
fairly heavy gas purchases by many of the western utilities.
"We've still got some weather in the West, and it'll stay cool
here a few more days," a marketer said.
A Midcontinent source noted it was becoming evident that less
Rockies gas was coming into her region as more stayed home to cope
with the western chill. That was causing Midcontinent/Rockies basis
to tighten, she said. Rockies quotes in the mid to high $1.70s
compared with low to mid $1.80s pricing on the Midcontinent pipes.
Late last week the two markets were about a dime apart.
Lacking significant weather demand and influenced by modest
screen softening, eastern prices fell off but were rebounding up to
3-4 cents in late trading at some points, several traders said. A
Gulf Coast producer suspected that people were shuffling gas among
the various pipes in search of the highest prices, and that created
some space vacancies that hadn't existed in the early going. A
marketer helped confirm that perception; it got harder to find Agua
Dulce gas into Channel because it seemed that supplies were going
into pipes other than Channel, he said. "A producer that sold me 40
MMcf/d Monday into Channel said he could spare only 5 MMcf/d there
today [Tuesday]. He was taking the rest elsewhere for a better
There was still volatility in cash trading but it generally
stayed within a specific range, one source said. He saw Chicago
citygates start a little more than a nickel down at $1.93-94,
rebound to a flat $2, then fall back to around $1.97 in late
A marketer reported a lot of people, such as end-users, are
finishing up their storage requirements. However, April is still a
withdrawal month on the Northern Natural Gas system, he said, so
"we're seeing a lot of guys trying to clean that stuff up [complete
withdrawals from NNG storage]."
Several traders have observed gas load being supported in recent
weeks by nuclear plants going down for refueling in preparation for
summer power demand. In a twist on that situation, Chicago-area
Commonwealth Edison said Tuesday 1,078-megawatt Unit 2 at LaSalle
nuclear station near Marseilles, IL could return to service soon
and be at full power by late April or early May. The twist is that
the unit has been down since September 1996.
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