Eastern Prices Soar on Cooling Load While West Falters
The geographic divide between gas markets seldom has been more
distinctive than it was Friday. Opposite corners of the U.S.
represented the extremes: Northeast citygates skyrocketed by nearly
20 cents while the OFO-hit Southern California border plunged by
about 20 cents. In general it was another case of East being East
and West being West, and the twain had almost nothing in common.
Quotes for eastern markets gained upward momentum going into the
weekend, sparked by more record-setting heat with little let-up in
sight and the second straight day of double-digit gains on the
futures screen. Almost every point rose by a dime or greater amid a
widespread cacophony of electric utilties reporting new power
demand records, appealing for energy conservation, curtailing
interruptible customers and/or warning of potential rolling
It took Duke Power and Commonwealth Edison, which had announced
setting load records Wednesday (see Daily GPI, July 23), only one
day to break those records Thursday. The heavy gas demand had many
people pulling gas out of storage to satisfy it, a Midcontinent
marketer said. "That [storage withdrawals] will always raise
prices" when it happens during what is normally an injection
period, he noted.
Pacific Gas & Electric threw a curve by many traders when it
elected not to continue a high-inventory OFO beyond Friday. Quite a
few deals were done on the presumption that the OFO would still be
in place Saturday, a marketer said. It's really a guessing game on
whether the OFO might get re-instituted for Sunday, she said, "but
you can bet everybody concerned will make sure their pager
batteries are fresh this weekend."
There was no guesswork about the Southern California border as
SoCal Gas declared an Overnominations Day for at least Saturday. A
PG&E citygate drop of a little over a nickel was quite mild in
comparison to the border's plunge into the high $2.10s. The
California weakness rippled into the Rockies, where gas that
couldn't find its way into the high-priced Midcontinent/Midwest
markets was subject to OFO-like procedures implemented for the
weekend by utilities in Colorado and Wyoming.
Several sources agreed that tentative August cash business came
to a near-standstill as traders gazed in awe as futures again
posted a large increase. "Those [screen] rises seem to have taken a
lot of people's breath away," commented a Gulf Coast producer.
Buyers reported getting August offers Friday at $2.23-24 for El
Paso's San Juan-Blanco pool and at plus 1 basis for the MRT
Due to its heavy reliance on Canadian gas, California is one of
the few domestic markets that can stay isolated from large price
moves at Nymex, a marketer said. Because of that, Southern
California border basis quotes have collapsed as the screen
rocketed higher, he said.
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