Demand for Storage Gas Pushes Prices Higher
The rebound from Monday's price downturn bounced high above the
rim Tuesday as many price points experienced gains well over a
nickel. The upticks were attributed to a rise in the futures market
late Monday afternoon and early evening, and a growing inclination
to buy gas for storage now before prices rise further.
Gains were highest in the Northeast with Columbia and CNG
trading in the high $2.30s. New York citygates registered similar
advances into the low to mid $2.40s. One Northeast trader said the
rise was caused by traders buying gas to put in the ground. "There
is greater demand for storage gas as fields that have been resting
between the withdrawal and injection cycles are now coming back
In a turn-around that many would have believed unthinkable
earlier this year, the trader added another factor pushing prices
upward is that oil has recovered to the point where industrials are
finding it economic to switch to gas. "Because of the precipitous
rise in crude oil and related products, we are starting to see some
fuel switching from heating oil to natural gas in the Northeast."
Prices recovered somewhat in the Midwest after experiencing
losses between 4 and 12 cents Monday. One marketer said the
Midcontinent's Tuesday recovery, which ranged between 3 and 7
cents, was related to last summer's experience when Chicago prices
peaked in the $2.40s and $2.50s in June and July. "There is a sense
of urgency to put as much gas into the ground now before prices get
Downed Texas nuclear plants (See Daily
GPI, April 8), along with temperatures that reached the 80 degree
level for much of West Texas, southern New Mexico and southern
Arizona, helped prices stay strong at many of the southern points, a
Texas trader said. Waha traded in the $2.08-12 range and Katy traded
in the mid teens, representing a rise of more than 6 cents for each
point from Monday's averages.
"Although those nukes are scheduled to be back in service at the
end of the month, people are buying all the gas they can to make up
for them. This is still the cheapest month to buy gas, so many
people are doing so."
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