Screen Provides Stability for Most Cash Prices
Given modest support by a small screen gain, most cash trading
points tended to level off Thursday instead of continuing a slide
that many had expected would last into the weekend. Northeast
citygates constituted the rare weaker market in the East with drops
of almost a nickel as the region cooled off further from a heat
wave that set power generation load records early this week.
The day's biggest decline of almost a dime occurred at the
PG&E citygate, where the utility's high-inventory OFO for today
(see Transportation Notes) deterred traders. It was the first such
non-weekend OFO of the season, according to a marketer. The related
Malin delivery point fell almost a nickel, but the Southern
California border was essentially flat as SoCal Gas declined to
declare an OFO-like Overnominations Day, he said. It's still hot in
California and forecasts are for even hotter weather over the
weekend, the marketer added, so he expects to see little decline in
western prices today.
One source suggested AGA's report of 69 Bcf in storage
injections last week may have been just enough on the low side of
expectations to encourage bullish-minded traders. A Gulf Coast
marketer thought prices might even achieve a small rebound Thursday
due to the storage report and Access futures trading's positive
reaction to it Wednesday evening, but he found most pipes priced
"pretty much flat from the day before."
The cutbacks on gas purchasing by electric utilities have been
quite noticeable in the last couple of days, a Midcontinent trader
said. He and an area producer agreed the market appears to be
settling at least temporarily back into the low-volatility doldrums
that prevailed prior to the recent heat wave fireworks. The
producer managed to see a possibility for a flat weekend market.
With industrial buyers reducing gas takes, many traders are poised
to snap up packages today at what they expect will be significantly
lower prices, he said. "Too many" have that mindset to allow a
sizeable price dip, the producer concluded. However, should Henry
Hub futures for August remain around $2.16 while July cash in the
Midcontinent stays in the $2.10 neighborhood, "I expect commercial
storage holders to sell physical gas and buy the August Nymex
contract," he said.
©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.