Screen Gets Most Credit for Strong Swing Quotes
As the countdown to today's May futures expiry continued
Tuesday, swing cash prices certainly did their part to encourage
the bulls in Nymex's trading pit. But in a form of reciprocating
support, sources said late-April price rises of about a dime in
most markets were based almost solely on screen upticks Monday and
Tuesday. Except for moderate air conditioning load in Texas and the
Southeast and a bit of lingering chill in the West, weather
fundamentals were almost non-existent, they said.
Although increases of a dime or more made Midwest citygates
among the day's strongest trading points, Midcontinent field prices
tended to lag the overall market with several pipes little more
than a nickel higher. The Midcontinent tried to start nearly a dime
up but quickly faded back a few cents, one marketer said. Noting
the citygate strength, she suggested that maybe the economics of
transporting field gas made it a better strategy to fulfill Midwest
demand from storage. In addition, since the West is no longer as
cold as it was earlier this month, it's likely that more Rockies
gas is flowing east into the Midcontinent/Midwest market, she said.
May basis appeared to be a tale of two regions Tuesday. Gulf
Coast basis is remaining very tight, said a trader who perceived
basis for Agua Dulce, Katy and Houston Ship Channel as a penny
tighter than usual. And a Florida Gas Transmission trader said that
pipe's basis is strong because of "extra-tight capacity" on the
system, which he called very unusual for this time of year.
But a producer said Southwest basis is widening due to the
screen's rise and also to the expectations of hydropower figuring
more and more prominently into the West's electric generation mix
as May proceeds. He pegged new basis Tuesday at minus 16-17 for
Permian Basin, minus 27-28 for San Juan-Blanco and minus 9-10 for
Southern California border. Because of "a heck of a lot of
maintenance" scheduled for May in San Juan Basin, the producer
thinks California buyers are sourcing more May gas from the Permian
Basin than they have in the past few years.
Convergence was working well for a marketer reporting California
border prices for May in the mid $2.20s, only a penny or two less
than his late-April swing numbers. But a Sumas trader said May
prices there had slipped to $1.90-95, more than a nickel below his
April quotes in the low $2.00s.
The contrast between this bidweek and the last one is readily
apparent, a Midcontinent trader said. "If you look at April's
bidweek, people couldn't give it [gas] away. To be short was to be
envied," he said. "But with the price run-up during April, they've
[short-position traders] been hammered. Now, in this bidweek,
nobody wants to be caught like that again, so everybody is going
©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.