Prices Up Slightly, More So in Supply-Constrained West
The cash market settled down to mostly small gains Tuesday,
although quite a few points registered close to flat. The larger
increases of a nickel or more were concentrated in California and
the Permian Basin and on CIG, which played belated catch-up with
other Rockies pipes by rising almost a dime.
Fundamentals had little to do with the modest firmness in the
East, traders said. Instead it was more due to an increase of just
over 3 cents in August futures and the ability of crude oil futures
to finally surmount the $20/bbl hump Tuesday. An East Coast
electric utility said it has been close to buying only gas for
generation needs lately because fuel oil was uncompetitively
expensive. However, loads related to warm weather will stay fairly
light for at least a couple more days before temperatures start
heating up around the weekend, said the utility's gas buyer.
Fundamentals came more strongly into play at western points.
Although hot weather had eased enough that the California
Independent System Operator (Cal-ISO) did not have to renew an
electrical Stage One Emergency declaration issued Monday afternoon,
enough heat remained in the West to keep power generators buying
substantial amounts of gas. In addition, the outage of the Chaco
Plant was still having its effect on constraining San Juan Basin
supplies, and Rockies points reacted in sympathy with the San Juan
shortfall. The variable cost of transport to move Rockies gas to El
Paso's Blanco pool in San Juan Basin is about 5 cents, a marketer
estimated. In addition, he said, a minor maintenance outage of the
Big Piney Compressor Station behind the Opal Hub system was taking
a small amount of Rockies gas off the market.
El Paso Field Services clarified the situation at its Chaco (NM)
Plant. The plant, which had been yielding 450-460 MMcf/d recently
at its tailgate, will remain totally down for maintenance through
Thursday, a spokesman said. Then a lingering curtailment of about
60 MMcf/d will continue through July 22. However, EPFS is talking
with producers about supplying enough extra gas to mitigate that 60
MMcf/d shortfall, the spokesman said.
The continued heat in the West helped pull up Waha prices to
only a penny or two below Henry Hub and approximate parity with
Katy, one trader said. However, rain and overcast skies in East
Texas kept Houston Ship Channel numbers somewhat depressed to just
above Henry Hub, he said.
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