Daily GPI / NGI All News Access

Nymex Drop, Weekend Load Press Cash Downward

Nymex Drop, Weekend Load Press Cash Downward

Shrinking demand due to warmer weather throughout the country conspired with a 6.1-cent drop on the Nymex futures contract Thursday to put an end to a small and short-lived boost from a relatively bullish storage report. Friday's cash prices retreated an average of 3-4 cents in most areas, erasing the small gains from Thursday's trading, and bringing cash back to the level it hovered around most of the week.

"Prices were down across the board in reaction to the Nymex drop and ahead of the typically low weekend load," one trader said. Prices at areas such as the Houston Ship Channel, New York citygate and the PG&E citygate were down as much as 7 cents on the day.

Intra Alberta prices also came down with Friday's reaction to the Nymex slide, according to a Calgary-based marketer. "Looking ahead, the weather is going to be unbelievable this weekend in Calgary, with temperatures topping out at [about 70 degrees]," he said. "The guys are talking about playing golf, which is definitely not the norm for March in Alberta."

"The market is so dead right now that we're starting to look at Feb-Oct. deals," said another trader. "A lot of end users are looking to lock-in the one-year strip just because everything is so low right now." He added that looking forward, the most expensive month now is Jan of 2001 at 2.47 for Chicago citygate delivery. For the one-year, Jan 2000 is the most expensive at 2.37. "This means that for less than a year, your worst price is $2.37, which is very tempting for utilities."

Taking a look at NGI's Daily Gas Price Index quotes at this time last year shows the Henry Hub, Chicago citygate and the southern California border were trading approximately 44 cents, 53 cents and 58 cents higher than current levels, respectively.

"This makes the current cash price levels reasonable by comparison, taking into consideration the size of the year-on year storage surplus," one source said. Moreover, looking back at weather patterns at this time last year, "we find them to be relatively close to current patterns. The only difference in this case is that we started the last injection season with expectations of a much colder winter and we ended up with a largely moderate winter and too much gas in storage."

©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.

ISSN © 2577-9877 | ISSN © 1532-1231
Comments powered by Disqus