Price Drops Tend to Be Larger Toward the East
The cash market split somewhat along geographical lines again
Monday as overall softening grew greater going from West to East.
Most Western points were flat to no more than 2-3 cents down, while
Eastern declines mostly ranged from around a nickel to a dime.
Although a big winter storm dumped piles of snow from the
nation's midsection through the Northeast over the weekend, by
Monday's trading it already was getting ready to move beyond New
England into the Atlantic. A trader said it was still very cold in
the New York City area Monday-which may have helped explain why
Transco Zone 6-NYC's drop of about 5 cents was among the mildest
decline in the East-but that temperatures should start moving
A trader at the Southern California border thought the Southwest
supply basins stayed strong because of balancing reasons, helping
keep the border flat. That's the main reason western prices weren't
dropping as much as in the East, he said. However, another source
said PG&E's Diablo Canyon nuclear plant was coming back on-line
and should be at full power by the end of this week, likely
knocking out even more gas load in a region awash with plentiful
"It was another quiet market with nothing really to push it in
any direction," said an Oklahoma marketer. And a marketer in
Calgary said, "Everyone's looking at the screen and wondering what
happens next." The Henry Hub futures contract for April contributed
to cash weakness with a fall of about a nickel.
Sources remained mostly bearish in their price outlook. With the
storage overhang and upcoming warmer weather, no reason exists to
buy gas, a marketer said. He doesn't expect the market slide to
stop for the foreseeable future, saying only a major supply
disruption such as a pipeline explosion could reverse the
downtrend. Another trader said the falling prices are "long
overdue, but I'm hesitant to say it will fall much further."
Commenting on the merger announcement Monday morning by El Paso
Energy and Sonat Inc. (see story in this issue), a utility gas
buyer quipped, "It looks like El Paso is trading one Southern for
another." Last month there were reports that El Paso was in merger
talks with electric utility firm Southern Co.; and Sonat is the
parent company of Southern Natural Gas interstate pipeline.
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