Screen and Storage Nudge Spot Market Higher
Wednesday marked the first time in a week that double-digit
moves were nowhere to be found in the cash market. Most points
registered small gains of 2 to 5 cents, feeding off a strong
futures screen and a bullish American Gas Association (AGA) storage
report of a 26 Bcf injection.
The AGA report was well below industry expectations of a 35-40
Bcf injection and actually included an 11 Bcf withdrawal in the
Producing Region. One trader, who harbored a guess of a 38 Bcf
injection before the actual number was announced, said it would
take a number below 30 Bcf to make an impact on trading. "Most
everybody knows what is going on by now," he said. "The fact that
everybody has been taking gas out of storage won't surprise anyone
and has already demonstrated its impact through the futures screen.
If the number comes out where people think it will, in the 38 Bcf
range, the report won't have much impact. I think it would take a
number below 30 to really grab people's attention."
The only point to register a decrease Wednesday was Transco Zone
6 (New York), which fell into the high 2.80s. "The basis was really
inflated last week when Transco Zone 6 (NY) was trading at a 32- to
34-cent premium to the Henry Hub," one trader said. "Now it has
settled in the plus-25 range on the shoulders of a strong futures
market which has been able to soften the blow of lessening power
generation demand." Other points in the Northeast fared better as
M3 and Transco Zone 6 (non-NY) rose a few pennies to a nickel.
The largest gains of the day were seen in the Rockies, as
Questar jumped into the high $2.10s. Although many sources said the
screen was the main factor in the increases, one source added that
continuing Aeco strength and the ending of the Opal maintenance
helped support prices as well.
One western trader said business was back to normal Wednesday
after PG&E lifted the high-inventory Operational Flow Order it
placed on its system Tuesday. PG&E gained about a nickel into
the high $2.60s and the Southern California Border rose into the
In the Midwest, the Chicago market continued to feel very short,
one trader said. It seems that several marketers have gone into the
month short and that is causing Chicago to be very well bid. The
Chicago citygate traded as high as $2.70 yesterday. Despite cooling
temperatures, demand for gas on the Oklahoma intrastate pipes has
remained strong as well. Almost across the board prices were up
between 5 and 7 cents.
In the Gulf Coast, prices nudged up to index levels, one source
said, but could not progress further. "Everything was up a little
from yesterday, and the outlook seemed strong in the morning. But
then I think the lack of power generation demand in the Northeast
finally caught up to us and the move kind of halted. There seemed
to be lots of gas out there."
Looking forward, one source was already feeling bearish about
the next storage report, noting that a small injection this week
will be an act unlikely to be repeated next week. "This week is
turning out to be much cooler than last week. The need for gas was
much stronger last week and that sets up some bearish situations
for next week's storage report."
©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.