Bidweek Quotes Fall Slightly After Screen 'Meltdown'
For a while Thursday it looked like August prices would keep
running higher based on a strong screen, continued heavy power
generation load and Wednesday afternoon's super-bullish storage
report. However, the uptrend crested and began subsiding a bit when
a late "meltdown" occurred in September futures, sources said.
Naturally buyers and sellers held differing opinions about the
mild reversal in bidweek numbers. A western buyer said he held off
Thursday after the previous evening's run-up in Access futures
activity, "but now that the screen is back down about 15 cents, I
will probably step out and buy some more [today]." A Midcontinent
producer, on the other hand, said most Panhandle Eastern deals had
been done in the mid $2.50s, but some folks were looking for gas in
the mid $2.40s after Thursday afternoon's downturn. However, in his
perception "there seems to be a good deal of demand left out there,
and I expect prices to start coming back up" this morning.
An industrial buyer reported experiencing "sticker shock" at
having to fork over $2.60 for a Houston Ship Channel package. Even
with prices subsiding slightly Thursday, he said, they still seem
steep both for August and for the November-March offers he is
Looking ahead to the aftermarket, a Midwest marketer is
expecting lower prices. Saying he expects the Chicago citygate
index to be around $2.69-70, he added, "Given the choice, I would
rather be short from $2.70 than long."
Except for a small touch of Rockies/San Juan flatness, it was
onward and upward again in the late-July swing market. Most points
ranged from a nickel to a dime higher, boosted both by the small
storage injection report and the intense heat wave dominating most
of the U.S. except for the West Coast. Futures pricing was
supportive, also, since it didn't take a dive until after cash
trading was over.
Electric utilities again struggled to meet customer demand,
especially in the Midwest, where Chicago and Michigan citygates
rose by almost a dime. Many power generators continued to break
recently set load records. The PJM Interconnection independent
system operator issued a hot weather alert for Thursday through
Sunday and at mid-afternoon Thursday issued a "Request to Purchase
Emergency Energy." Florida Gas Transmission issued an OFO due to
heavy market-area demand.
No letup in the heat is in immediate sight. Utilities such as
Cinergy in Ohio and Consumers Energy in Michigan asked their
customers to maintain their energy conservation efforts through
Thursday's market suffered from another kind of trouble as
traders who used Altrade's electronic trading system were cut off
for about eight hours, from 12:15 CDT until about 8 p.m. CDT. A
spokesman said those cut off represented about 50% of traders using
the system. Altrade's system had been carried through Internet
provider IBM, who chose yesterday, the heaviest gas trading day of
the month, to transition its system over to its new owner,
Customers who use Altra's direct connect system were not
affected. All Internet-based orders were put on hold to protect
those users who were disconnected. Altrade has been assured the
problems are corrected and trading should proceed as usual today.
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