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Cash Market Flattens Out Going into Weekend

Cash Market Flattens Out Going into Weekend

It was like old times again (if you can regard February as "old times") for traders Friday as weekend swing pricing leveled off with little change from Thursday. It reminded some of the long periods last month when there was practically no volatility in the cash market. The small gains handily outweighed a few scattered penny drops in the West for an overall showing of flat to a smidgen higher.

A gap of nearly C20 cents has opened between Westcoast Station 2 and intra-Alberta, which usually track each other much more closely, one source said. Station 2 was in the high C$1.90s while intra-Alberta traded in the mid C$2.10s, she said. A constraint is in place at Gordondale, the provincial border point where the NOVA and Westcoast systems connect, and whatever British Columbia gas can get through is flowing into Alberta because of the stronger market there, she added.

Predictably, late-March activity was dropping off as people turned more of their attention to the April bidweek. April trading picked up some Friday but was still rather slow, a marketer said.

A Texas producer noted, "We're selling Agua Dulce gas at Ship [Houston Ship Channel index] minus 5." His company is starting to see the effects of slowed-down drilling in 1998, he said, because current production levels are down considerably. He thought that was also true of many other producers. It was encouraging that crude oil futures closed above $16/bbl Friday for the May, June and July contracts, the producer said; "that helps make us more bullish on gas."

A marketer found very tight March-April convergence in the San Juan Basin. He was buying Blanco pool gas for April at $1.57-59, which dovetailed nicely with his March swing deals at $1.57-58.

One source reported Michigan citygate basis at plus 8.5, saying it had gotten stronger since earlier in the week. Michigan temperatures were around 50 degrees Friday, "which is a veritable heat wave for that state in March," he said.

A marketer hearing $1.52-53 numbers for Sumas in April said summer term (April-October) deals were a bit higher at $1.54-57. The intra-Alberta differential was even bigger, she said, quoting April-only at C$2.23-24 and summer at C$2.33-35.

"I don't care whether the direction is up or down, I just want to see a sizeable change Monday in the April futures contract prior to expiration," a Northeast-oriented marketer said. "We need more volatility, but I'm afraid it probably won't happen."

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