Both May and June Numbers Flat to Slightly Higher
June bidweek activity heightened considerably Thursday as
traders sprinted toward the finish line, either trying to wind up
everything Thursday or leave only a few tail-end deals to complete
today. A marketer who made six Chicago citygate deals in a very
tight range on either side of $2.30 said June prices were just
barely higher despite a gain of more than a nickel in the July
Henry Hub futures contract. He thought the lack of volatility was
due to many people leaving early for a long weekend. If more
traders were still around and working there would be more input and
breadth to the ranges.
A California buyer came up with a rather innovative structuring
of June supply. She bought 5 MMcf/d at GPI's Southern California
border index plus 0.25 for seven-day-a-week deliveries. However,
another package of 5 MMcf/d will be at the GPI index plus 0.5; she
paid a slightly higher premium to take that gas on weekdays only.
That was done to avoid potential oversupply penalties on weekends,
The late-May swing market was dwindling rapidly to no one's
surprise. Nearly all points ranged from flat to about a couple of
cents higher. Sumas and Westcoast Station 2, though trading
approximately flat most of the morning, got "hammered" at the end
as there seemed to be more and more long supply positions emerging,
a marketer said. But the late weakness at those British Columbia
points failed to carry over into neighboring province of Alberta,
where quotes went up a couple of pennies. A Calgary source said she
was "anticipating, although I'm not sure that's the right word,"
the big NOVA outages starting Monday that will take about 940
MMcf/d off the market through June 9. That should keep the
intra-Alberta market strong through the first week and a half of
June, she said.
Despite a San Juan Basin supply disruption of about 270 MMcf/d that
was extended through at least today when El Paso was unable to
complete Blanco Plant maintenance as scheduled Thursday (see Transportation Notes), San Juan swing
quotes were unable to derive any support from it, ranging from flat to
There was a consensus that today's swing quotes for the weekend
are going to be "dismal," as one source expressed it. A
Houston-based producer expects some rebound in prices after the
holiday but thinks they basically "will continue to be led around
by the screen." But an Eastern marketer looks for the post-holiday
market to enter a consolidation phase, predicting "we'll test new
lows before getting higher towards the end of June."
A number of Canadian traders are looking forward to their second
straight long holiday weekend. A couple of Calgary sources noted
that in addition to last Monday's Victoria Day, they also will be
off for Memorial Day. After all, as one observed, "We figure the
gas market will be extremely quiet with all the Americans out."
This market has been so boring recently, a Midwest marketer
said, that "I think we need a hurricane to get things stirred up."
Her remark was timely, because June 1 marks the official start of
the 1999 hurricane season.
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