Western Warm-up Throws a Chill on Gas Prices
Cash prices staged a broad-based retreat Monday, giving up 3-5
cents at most Eastern points with Western declines tending to be
larger at a nickel or more. The market lost some of last week's
fundamental support as a warming trend started to develop in the
West, sources said. In addition, although the Henry Hub futures
contract for May later reversed field and achieved an overall gain
for the day, its weakness in the morning rubbed off on cash
"I bet a lot of people are scratching various parts of their
anatomies wondering why this screen is so high," said a
Midcontinent trader of the afternoon rebound in futures. When
screen momentum gets going, cash follows along pretty soon, he
added, so he expects cash prices to hold up either flat or a bit
Although it was still fairly warm in the South Monday, gas prices
should lose some more basis support as regional temperatures cool off
this week, a producer said. However, Zone 2 prices into Florida Gas
Transmission (high $2.00s) again topped the Gulf Coast, not only
because gas demand for peaking power generation remained strong in the
Florida peninsula but because the pipeline's entire upstream Zone 1
will be shut in today through Thursday (see Daily GPI, April 9). One trader reported
hearing FGT-Zone 2 offers at $2.12 but wasn't sure how much gas might
have traded at that level.
Intra-day trading was heavier than usual, according to a
Northeast trader who thought utilities in the area might have
underestimated their weekend needs and were having to catch up on
supply. Appalachian and Northeast citygate numbers fell only 2-3
The fact that NOVA continued to restrict firm service deliveries
at the Eastern Gate to 94% of normal capacity was causing supply
problems, a marketer said. Whatever intra-Alberta gas was able to
get through the provincial border export point held its value
fairly well, trading mostly flat in the C$2.50-51 area, he said.
The same could not be said of another Canadian export
point-Sumas-which succumbed to the drop in Western heating load
with a price fall of about a dime. The domestic product into
Northwest fell almost as far (about 7 cents).
For several sources, Monday seemed like a return to the slow,
quiet trading mood that characterized much of March's activity.
Undoubtedly many would agree with the Midwestern source who
observed, "It's a slow afternoon, there's beautiful weather here,
and I should be out golfing."
General Midcontinent basis for May was quoted at minus 10-11. A
Calgary trader said he was doing intra-Alberta deals for May at
C$2.54, about C3-4 cents above Monday's April swing.
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