Screen, 'Lack of Weather' Cited in Minor Cash Drops
Cash quotes were mildly softer Monday, with price movement
ranging from none (flat) to down about a nickel. A July futures
drop of just over 7 cents was the obvious explanation for cash
weakness to many sources. A Houston-based aggregator asserted that
"lack of weather" in both the Gulf Coast production area and
Northeast market area exacerbated the screen's negative influence.
Forecasts continue to call for hotter temperatures later this week,
he said, "but it's not happening yet." Even with Monday being the
official start date for summer, recent high thermometer readings in
the South are only rarely getting above the 80s, he said.
But to a marketer, weather was the reason why Midcontinent
prices tended to resist the downturn more than in other reigons.
"Cash wanted in the worst way to fall more than it did today" but
held up due to fairly good utility demand, the marketer said.
Midcontinent temperatures are only in the 80s but humidity is high,
A western trader said he continued to see substantial UEG
(utility electric generation) demand in the Southern California and
east-of-California markets. Border quotes were flat to off only a
couple of pennies in most cases. But Malin and PG&E Citygate
numbers fell by about a nickel as PG&E extended a
high-inventory OFO into its third straight day today. That closed
the basis differential between the citygate and the Southern
California border to only 11 cents or so, "which is pretty small,"
a marketer said.
While the East is expected to get hotter this week, weather is
headed in the other direction out West, one source said. The
western heat is supposed to taper off throughout the week and then
"really fall off" at the end, leading the source to predict
steadily declining regional prices through Friday.
July business is extremely tentative at this point, primarily
due to "so much uncertainty" with the power and futures situations,
according to a Canadian marketer. A Texas source was hearing
Chicago basis talk of plus 3-3.25, down about a point or so from
June. He also reported offers at minus 11.25 and bids at minus
11.75 for the Midcontinent pipes in general. July basis gets a
little tighter every time Henry Hub futures go down, he said.
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