Weather, Screen Heat Up June and July Quotes
Those bemoaning a relative lack of volatility in much of the
cash market since early spring must have enjoyed Tuesday. Things
were very strong-"to put it mildly," as a marketer said-in trading
Tuesday for both the month of July and the last day of June. It was
obvious to everyone what was heating up prices: heat now and
forecasts of more heat later. A strong showing by the August Henry
Hub futures contract lent further support to cash.
Late-June swing quotes reached over $2.60 in a few cases at
opposite ends of the U.S. (Northeast and PG&E citygates). The
bullish mood was infectious enough to carry over even into the
Midwest, where temperatures had cooled off since Monday. Chicago
citygates ran as high as $2.37-38, a dime above the previous day's
average. Western cooling load remained at about the same high
levels as it has the last few days, sending some Rockies pipes back
above $2 and Southern California border quotes into the $2.40s.
ISO (Independent System Operator) New England said it went to a
Power Warning-more urgent than Monday morning's Power Watch (see Daily GPI, June 29), according to a
spokeswoman-at 6 p.m. EDT Monday but was able to lift the warning as
of 5 p.m. Tuesday. Everybody came through OK, she said, even as the
New England power pool set an all-time sendout record Monday at 21,810
megawatt-hours. The ISO had projected Tuesday's load at 22,000 Mwh but
fell about 700 Mwh short, the spokeswoman said.
Swing trading for the rest of the week will be a little tricky,
predicted a Gulf Coast marketer, because there are folks selling
gas for the first only, for July 1-2 and for July 1-6. All of it is
going at a hefty discount to the August screen, leaving buyers in a
quandary, he said. Do they pay what might end up being a high price
now, or do they risk being stuck without gas for the first six days
of August once all the suppliers are sold out? Add to that the
willingness of salt dome storage players to pull gas out at prices
over $2.40, the marketer concluded, and you have a "very dynamic"
market over the next several days.
A tropical wave was moving westward in the Caribbean Sea but
reportedly showing no signs of development as of Tuesday afternoon.
Several buyers were taken aback by the swift rush higher in July
prices, in which bidweek increases matched incremental ones of up
to a dime at many points. An example was the California buyer who
reported getting an early-morning border offer at $2.42, about a
nickel up from Monday. Not much later the same supplier called
again with a new price of $2.49, saying he had gotten that much
from someone else. The buyer decided to index her purchases.
A Rockies utility buyer said there was "less gas out there than
I expected." An Appalachian trader had a somewhat similar
experience, expressing surprise that only a few people tried to
sell him gas for the holiday weekend. "Usually they would be
begging you to find a place to park it [gas]," he said.
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