Daily GPI / NGI All News Access

Heat Helps Market Avoid Usual Weekend Slump

Heat Helps Market Avoid Usual Weekend Slump

Cash prices ignored a falling screen and the usual lower gas demand of a weekend, instead using growing heat in the Northeast and Midwest to fashion an overall flat market Friday. The East had more of the mild firmness while small declines tended to cluster more in the West. That was best illustrated by the day's extremes: increases of more than a nickel for citygates in the hot and humid Northeast, as opposed to a drop of a nickel at the PG&E citygate, where the utility had a high-inventory OFO in effect (see Transportation Notes).

A Gulf Coast producer, "wishing it would stop raining for a while," said the week-long period of rain continued to dampen Southern air conditioning load into the weekend, so it must have been warmer market-area weather that was mostly responsible for slightly higher prices on several Gulf pipes Friday. It's certainly not like last year's drought period when "we were under a fire watch because it was so hot and dry that some Fourth of July celebrations were canceled."

Besides the increase in cooling demand for gas, a Southeastern utility buyer also saw higher weekend load than usual from industrials. He explained that while industrial plants typically shut down or curtail operations for a holiday weekend such as the Fourth of July, they tend to make up for it with higher demand for the weekends on either side of the holiday.

Noting the dime spread that has opened between Appalachian pipes CNG and Columbia Gas (TCO), a large aggregator said it was because TCO is limiting storage customers to having only 60% of their contract volumes injected as of the end of June. That leaves the TCO shippers with fewer options on where to take their gas, he added.

Several sources perceived July pricing as a penny or so higher Friday, although one trader said Michigan citygates slipped a tiny bit. He pegged Michigan basis as plus 4.5-5.5 while Chicago remained at plus 3-3.5.

Basis was a little weaker (that is, larger negative numbers and smaller positive ones) in the Gulf Coast, a marketer said. Buyers are "very lethargic" about July business, he said. That had sellers getting a bit more aggressive by lowering their offer prices.

Most LDCs continued to stay on the July sidelines, with some indicating they may postpone most purchases until after the holiday, according to a large aggregator. The market "could get ugly" for the first few days of July, he continued, "but I expect it to take off after the Fourth of July weekend because by then normal summer heat should be over a much wider region than it is now."

©Copyright 1999 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus