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Small Southwest Rises Contrast With Mild Softness

Small Southwest Rises Contrast With Mild Softness

Except for small upticks in San Juan Basin and related points partially due to an unexpected compressor station outage (see Transportation Notes), the cash market again was mildly softer Monday. Much like last week, a screen decline of about a nickel provided about the only influence meaningful to cash traders. Even some cool weather returning to the Midwest failed to keep Chicago and Michigan citygates from dropping 2-3 cents, while Midcontinent field numbers were mostly flat.

Transwestern clapped a ceiling of about 700 MMcf/d on San Juan Lateral capacity through Thursday after lightning knocked out its Bisti Station Monday. That had a few people scrambling for intraday "renom" gas, a marketer said, but apparently the situation wasn't too bad. He was notified that he would lose some supplies at the California border but was somewhat relieved when word came that the cut would be only about 1.6 MMcf/d. A couple of other Southwest traders said they were unaffected by the Transwestern outage.

The market was quite quiet north of the border as nearly all Canadian traders observed Victoria Day.

Swing cash was weaker along with the screen Monday morning, a Houston source said, but that didn't matter much to people who were already starting to put their May positions to bed and prepare for June business. But typical of most bidweeks, "tire kicking" with little concrete action was a common description for this one's beginning.

Basis appeared to be a little tighter than before Monday, probably because of the further weakness of the June Henry Hub futures contract, a Midcontinent marketer said. Index-premium deals were being driven lower, he added. Panhandle Eastern and NGPL-Midcontinent packages traded at index-minus premiums and trading ANR-Southwest at index-flat.

A Southwest source reported hearing basis of minus 12-14 (ask-bid spread) for El Paso-Permian, minus 22-24 for San Juan-Blanco and flat for the Southern California border. Another trader quoting minus 13-14 basis for Permian Basin said he expects activity to pick up considerably Wednesday and Thursday and that this will be a relatively heavy bidweek for fixed prices.

Florida Gas Transmission-Zone 1 may be a tough sale for a while, a marketer observed because the pipeline extended a maintenance constraint at Johnson's Bayou in southwestern Louisiana beyond its original scheduled completion of May 17 and has yet to set a new end-date. That has some people reluctant to commit any June baseload there at this point, the marketer said.

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