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Futures Plunge May Get Delayed Cash Reaction

Futures Plunge May Get Delayed Cash Reaction

"Following the screen" obviously didn't apply Tuesday as the cash market's mostly flat performance was a far cry from the 8.1-cent drop in the Henry Hub futures contract for June. But, as a Gulf Coast trader noted, a substantial portion of the screen softness occurred after cash had finished trading for the day, and to him that means it's a safe bet to expect a decline in cash prices today.

Weather continued to have virtually no impact on the current market, with temperatures ranging in the 60s and 70s across most of the nation.

A Houston buyer pointed out a potential depressant on gas prices: A plunge of more than 80 cents Tuesday in crude oil futures for June left that contract not far above $17/bbl. Apparently crude traders are losing faith in the ability of OPEC nations to maintain production cuts promised earlier this year, he said.

Tuesday's only significant price hikes of more than a couple of cents came in San Juan Basin and on Northwest (domestic), which are affected by supply constraints resulting from maintenance outages at the Blanco and Opal plants respectively. However, the outages don't appear to be hindering acquisition of gas very much, said a big aggregator quoting Northwest at $2.13-14, barely a penny under his San Juan deals at $2.14-15.

Plant turnarounds in Alberta are helping provincial prices to resist any screen-related softness, a marketer said.

One trader expressed surprise at seeing cash quotes hold firm in the Midcontinent. Deliveries into Northern Natural Gas at Ventura got some boost by a cut of 10% on Northern Border volumes, which sent some people scrambling for replacement gas, he said. The Northern Border bulletin board said unplanned, weather-related compressor outages at Stations 13, 14 and 17, combined with an upcoming planned outage at Station 13, required the pipeline to reduce flows to 90% of summer design capacity for today through Friday.

A marketer reported having no luck in trying to get some June business going either Monday or Tuesday afternoon. He was hearing a "typical" differential of about 1.5 cents between bids and offers at Texas points.

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