Cash Downturn Was Not Hard to See in Advance
As presaged Tuesday by late retrenchment in cash quotes and a
screen drop that carried over into Access trading, the cash market
was in full retreat Wednesday. All points were off by at least a
nickel or so, and most of the decreases were around a dime. In what
was described often as quiet trading, the softening Henry Hub
futures contract for June was the only significant influence on
cash that sources could cite.
"It's the same old pattern as before: wherever the screen goes,
we go," said a Houston-based marketer. He was in a bearish mood,
saying it looks like fundamentals will continue to sit out the cash
market for a while, "and meanwhile there's still this huge
year-on-year storage surplus." The marketer expressed mild shock
that Gulf Coast and Northeast prices didn't fall off any more than
they did Wednesday.
Most of Tuesday's decay in futures value took place after cash
had finished trading, so cash was mostly "catching up" Wednesday,
according to one source. But don't underestimate this week's
softness in crude and unleaded gasoline prices, he added; in fact,
the "whole hydrocarbons complex is soft" and that is weighing down
the gas market.
One source quoted Florida Gas Transmission-Zone 2 flat to Sonat
on either side of $2.20. The two points have been trading within a
half-cent of each other for over a month now, he said. FGT-Zone 2
prices are usually lower than Sonat's but have been coming on
strong due to strong air conditioning load, he added.
A West Coast trader was surprised at the ability of Sumas (off
about 4 cents) to withstand the downturn more than other markets.
"I guess it is still a little cooler [in the Pacific Northwest]
than people expect it to be, and those same people need gas for
One trader was already selling intra-Alberta gas for June in the
low to mid C$2.60s, approximately the same prices he was seeing for
daily swing Wednesday.
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