Weekend Market Sags, But 1st-Only Gas Near Indexes
As expected, cash prices for the long weekend that ended May
were down across the board Friday, although not by as much at some
points as sources had expected. A strong performance by the Henry
Hub futures contract for July largely failed to counteract a lot of
mild weather and the gas demand slump that nearly always
accompanies a holiday period. The changes varied widely from barely
off a penny or two to as much as 15 cents down, with almost every
degree in between represented.
However, the softer trend reversed in most markets as swing flow
dates crossed over into the 1st of June. Deals done Friday for
Tuesday-only often were in the approximate vicinity of June bidweek
indexes and were a bit higher in a few cases. A Midcontinent
marketer said he didn't see much difference at first Friday between
weekend and Tuesday numbers, but then Tuesday quotes began rising
chiefly due to the screen uptick. He pointed out that 1st-only
swing could be traded into the afternoon beyond the normal 11:30
CDT nominations deadline and thus late deals were greatly
influenced by the Nymex action.
The biggest weekend drop of about 15 cents came in San Juan
Basin despite El Paso's announcement that a delay in completing
Blanco Plant maintenance would extend a 270 MMcf/d supply cut
through Monday and possibly into June (see Transportation Notes).
Weekend swing gas was all over the place, said a Gulf
Coast/Appalachia trader quoting ranges of about a dime or more.
Prices were at their lows in the first 20 minutes and rapidly
rising toward their highs thereafter, he said. A lot of buyers were
confident of being able to buy heavily discounted gas for storage
over the weekend, he went on, figuring to take advantage of the 50
cents-plus gap between early Henry Hub pricing around $2.20 and
January futures trading above $2.70. "But too many of them were
thinking alike, and that pushed swing back up" from the early
depths, the trader concluded.
A lot of people had incentive to go long on physical gas on
several Gulf Coast pipes because of cash-out prices above the
prevailing market levels for late-month swing, a Texas marketer
said. But those pipes were worried about being oversupplied for the
Memorial Day weekend and threatening to issue OFOs if necessary to
keep shippers from banking gas on-system, she added.
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