Slight Break in Heat Allows Prices to Level Off
The furious upward rush of swing cash prices finally ran out of
steam Tuesday, leaving most of the market in a consolidation and
stabilization mode. Except for a nickel rise in Transco's Zone
6-NYC pool and milder increases on several Midcontinent pipes, flat
numbers were the order of the day at nearly all eastern points.
Although the Midwest and Northeast market areas had cooled off a
bit since Monday, forecasts for a heat wave to re-intensify later
this week kept prices from retreating, a marketer said.
"I've got to get used to saying 'three' instead of 'two' [in the
dollar place]," said a buyer after erroneously reading a Transco
Zone 6-NYC quote. Although Zone 6 non-NYC and Texas Eastern M-3
remained below $3, most quotes for the NYC pool were solidly over
Meanwhile, moderate softness dominated western markets. A small
decline at the PG&E citygate combined with a small rise at the
Southern California border to bring the two points just over a
nickel apart, compared to a more normal gap of about 15 cents, one
trader noted. "Essentially what that means is that San Francisco is
very comfortable [and cool] compared to Los Angeles," he said.
A dropoff in swing activity was evident as many sources had
already either baseloaded various points for the rest of July or
continued to clear the decks for bidweek business.
A producer quoting Houston Ship Channel basis at plus 1.25-1.5
said intrastate Texas basis is "very weak compared to the
intrastates." He sees no reason at all to question the recent
run-up in August futures. "Some people may try to deny it, but
there's just not as much supply out there as there used to be," the
producer said. "Just think, last December we had a 700 Bcf
year-to-year overhang in storage. Now we've worked that off and are
in deficit." That's why the Nymex contract is so strong, he
A couple of sources said Malin was trading in the upper $2.20s
for August. One was hearing PG&E citygates around $2.61 and
said the Southern California border is about a dime below that.
Another trader pegged border basis at plus 1-3 and said the border,
San Juan-Blanco and Permian were all trading at a slight premium
(less than a penny) over index.
The modest premium in index deals was in effect in the
Midcontinent also, according to a marketer who said the
Midcontinent pipes in general and Chicago citygates were being bid
at index plus 0.25 and asked at plus 0.75.
Other basis talk Tuesday included: Transco Zone 6-NYC at plus
27-28; Texas Eastern M-3 at plus 25; Transco Station 65 at plus
0.5-1; Chicago at plus 6-6.5; ANR-Southwest, Panhandle Eastern and
NGPL-Midcontinent pool all at minus 10-11; and Northern
Natural-demarc and Ventura at minus 8-9.
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