Screen Rests, But Cash Market Remains on Fire
The screen may have decided to take a breather Monday after
flexing its muscles so impressively last week, but the heated cash
market showed no signs of settling down. Western quotes staged
their by-now-familiar retaking of ground lost over the weekend, and
this time they actually shared in the general bull market by rising
in greater amounts than they had fallen on the previous Friday.
Eastern points, on the other hand, continued to build on the upward
trend they had seen all of last week.
Just gazing at new eastern price quotes, many traders likely
would have guessed the market was in the middle of a
colder-than-normal winter rather than the dog days of summer.
Transco Zone 6-NYC quotes actually peeked over into $3-plus
territory Monday. Continued price hikes were very much a power
generation play, sources agreed. The heat wave dominating most U.S.
weather outside the near-shore Pacific coast was not causing
emergencies but still pushed power generation capacity to the
Chicago citygates started strong in the $2.60s but fell back
later, a marketer said. He perceived the retreat as caused by
people withdrawing storage gas to sell into such a strong market.
But a producer saw the storage withdrawal strategy as "kind of like
robbing Peter to pay Paul. You've got to put back that storage
eventually, so do you pay up now or pay up later?"
The market area was much stronger than the Gulf Coast, said a
Northeast-oriented marketer. However, valve replacement work on
Transco should end by midweek, she said, and that will open some
extra IT at the Linden, NJ constraint point.
Although double-digit increases dominated all markets, the
largest ones occurred in the West, led by a San Juan Basin rebound
of more than 30 cents. Pacific Gas & Electric, after surprising
traders with the absence of a high-inventory OFO Saturday,
fulfilled their expectations with one Sunday but did not continue
Power generation is obviously driving the swing market, a
Midcontinent producer noted, and because the high temperatures are
expected to last through Friday, that should create strong bidweek
trading. "After that, who knows?" he asked rhetorically. The
producer reported August basis at minus 9.75-10.75 for Panhandle
Eastern and NGPL-Midcontinent slightly weaker at minus 10.75-11.75.
A marketer pegged Michigan citygate basis at plus 7.5 for Consumers
Energy and plus 8-8.5 for MichCon. He saw Chicago at plus 6.5-6.75,
but another source said that while Chicago had been plus 6.5
earlier, he perceived it as tightening a bit to plus 6 Monday.
Other basis talk included Niagara at plus 7, Columbia Gulf-onshore
at minus 2.25, TGT Zone SL at minus 1.5-1.75 and
Columbia-Appalachia at plus 14.5-14.75.
©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.