Cash Creeps Higher Amid Futures Action
Most cash points rose 1 to 5 cents yesterday on the strength of
a futures rally fired by a bullish American Gas Association storage
report. Traders were in agreement that prices were flat to
Wednesday until the futures screen picked up in the late morning.
"If you traded early, you could get flat prices, but once the
futures screen started rolling, both the Gulf Coast and the
Northeast moved upward hand-in-hand," a Northeast buyer said,
adding that Transco Zone 6 (NY) recovered from Wednesday's drop to
trade in the low $2.90s Thursday. The Henry Hub finished in the
high $2.60s, while the Tennessee 500 and 800 lines traded around
the $2.60 level.
The western market "remained a dog," one trader said, because of
very lackluster trading activity. The Southern California Border
traded at only a dime premium to El Paso Permian. She added that
electricity prices did not do much better and it is almost to the
point where it is not economical to use gas for generation.
" If you take a California Border price of $2.65, and add 50
cents to get it to the burnertip, you would have to sell your
electricity for $31.50 MW. However, clearing prices on the
California PX for tomorrow are only $26.50 MWh," she said.
A capacity constraint on Northwest's system caused Sumas to
weaken by a penny or two Wednesday, a Rockies trader said. In
contrast, Blanco stayed flat in the low $2.30s. "Loads north of
Sumas have been small lately, and people are over-nominating," the
trader explained. He added that Sumas prices should start rising
next week, because of the planned maintenance of BC Gas' West Coast
system, which should withhold 450,000 Dth/d. "This yearly
maintenance not only will raise Sumas prices in the middle of the
month, it also was responsible for Sumas' August index to be higher
than it should be," he said.
A Midcontinent trader said utilities were very active in the
spot market Thursday because they avoided long positions when
prices were strong during the last bidweek. He also pointed to the
start of the harvest season and the firing up of agricultural
processing plants as another reason for Midcontinent pipes gaining
up to a nickel.
©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.