West Pricing Strongest; Power Alert Effects Minimal
Monday's spot trading yielded a hodgepodge of results, with hot
weather in both the East and West being the primary market force.
Despite an appeal for electricity conservation in New England as
regional power utilities strained to meet demand, gas prices there
showed little change. But a western heat wave had quotes ranging
from flat to more than a nickel higher.
Not counting firmness in the Southwest and Rockies, the other
major producing areas (Gulf Coast, Applachia and Midcontinent)
generally were flat to off a few cents. The mild softness came even
with parts of the Southeast beginning to experience more normal
summer high temperatures in the 90s.
A Power Watch declared by ISO (Independent System Operator) New
England, effective at 11 a.m. EDT Monday and extended through
today, had relatively little impact on the Northeast gas market.
The New England power pool apparently was able to cope effectively
with high electric demand resulting from hot and humid weather, as
swing quotes for Transco Zone 6-NYC and Texas Eastern M-3 were
about flat. But as one source pointed out, Friday's citygate jumps
of about a nickel or so obviously had already factored in most of
the upcoming explosion of power generation load.
A power marketer said the alert was kind of a non-event for him;
peak-hour quotes of $60/Mwh in the New England power pool were
relatively mild, he added. The primary effects on gas from the
ISO's alert came in a large aggregator's Algonquin citygate quotes
averaging in the high $2.50s, about a nickel above M-3 and Zone
6-NYC levels. And a utility buyer in the region said an intraday
Zone 6-NYC purchase at $2.58 was 4-5 cents above swing deals for
The day's biggest increase of about 7 cents came at the PG&E
citygate, where the dual utility switched abruptly from a
high-inventory weekend OFO to projecting Monday's linepack would be
150 MMcf below its target. However, no new OFO was issued.
Western heat, especially in the California and
east-of-California markets, translated into generally higher gas
prices. The demand pull was enhanced by several traders showing up
short-handed in the Southwest supply basins, said a marketer who
was hearing peak-hour electric prices as high as $80/Mwh at the
Palo Verde Switchyard. Another source reported similar peaking
numbers on the California Power Exchange, saying non-coastal
temperatures were approaching 100 degrees. "That [$80/Mwh] is the
highest price for power we have seen so far in this 'so-called
summer,'" he said. California temperatures will remain high for the
next couple of days, he added, but then will go into a 10-degree
cooling trend heading into a holiday weekend.
July pricing was a little bit higher Monday, "maybe a penny to a
penny and a half," than on Friday, said a Northeast marketer. A
buyer reported getting Transco Zone 6-NYC offers at $2.48-50. New
fixed-price deals were reported at $2.24-25 for Sonat and Florida
Gas-Zone 2, $2.26-28 for Henry Hub, $2.04 for El Paso-San Juan
(Blanco pool) and $2.36-38 for the Southern California border.
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