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Overall Gains Are Largest in Western Markets

Overall Gains Are Largest in Western Markets

Increases of about a dime or more were common in the cash market Monday. The upticks tended to be larger in the West, approaching 20 cents in the California market and on some Rockies pipes. There was some fundamental validation of Western firmness as the region was unseasonably cool, especially in the Pacific Northwest, where temperatures were colder than in Alberta, a Calgary source said.

As for the East-"there's no special reason for prices being higher there, but they are," a marketer said. He speculated that some traders might be continuing to indulge in storage plays, buying physical gas now for injection and selling outer futures months. That concept got a modicum of support when, in contrast to the cash strength, Nymex's Henry Hub contracts for May through July finished slightly lower.

Some Louisiana points were seeing their first $2-plus quotes since early January. Sonat was running flat to slightly less than the Henry Hub Monday after commanding a modest premium for much of March, one source said. Currently Sonat is "so packed that it is hard to bring gas into the pipe," he added.

Prices "screamed upward" in the West, according to a trader whose Malin deals in the mid $1.90s were 15 cents above those preceding the Easter holiday weekend. Not only was there significantly cooler weather than usual for this time of year in the West, he said, but a modest screen gain achieved Thursday after the cash market had finished trading provided some support for the physical gas market Monday morning.

A small NOVA rupture late last week (see Transportation Notes) was of little importance to cash traders, a marketer said, but a low-linepack tolerance change caught more of their attention. Also, what he perceived as a basis play at Aeco C storage was becoming stronger "especially now that the basis between April and May has shrunk significantly." His company was seeing much less gas making it down to Malin from Alberta than in previous times "because the prices [Alberta-Malin basis combined with transportation rates] don't make much sense."

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