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East Prices Softer While Chilly West Hangs Tough

East Prices Softer While Chilly West Hangs Tough

The East-West divergence in price tendencies was repeated again Tuesday in a slightly different way. While Monday's overall upticks had been most pronounced in the West, eastern markets retreated by about a nickel Tuesday as Western markets managed mostly flat to barely-off-a-penny performances.

Western sources continued to cite colder-than-normal weather as reasons for the relative price strength in their region. PG&E citygates even managed a small increase largely due to a low-inventory OFO by the utility in effect today (see Transportation Notes). "It looks like we're trading in El Paso's OFO [the pipeline suspended an Unauthorized Overpull Penalty alert] for PG&E's OFO," a trader remarked. Sources noted continued fairly heavy gas purchases by many of the western utilities.

"We've still got some weather in the West, and it'll stay cool here a few more days," a marketer said.

A Midcontinent source noted it was becoming evident that less Rockies gas was coming into her region as more stayed home to cope with the western chill. That was causing Midcontinent/Rockies basis to tighten, she said. Rockies quotes in the mid to high $1.70s compared with low to mid $1.80s pricing on the Midcontinent pipes. Late last week the two markets were about a dime apart.

Lacking significant weather demand and influenced by modest screen softening, eastern prices fell off but were rebounding up to 3-4 cents in late trading at some points, several traders said. A Gulf Coast producer suspected that people were shuffling gas among the various pipes in search of the highest prices, and that created some space vacancies that hadn't existed in the early going. A marketer helped confirm that perception; it got harder to find Agua Dulce gas into Channel because it seemed that supplies were going into pipes other than Channel, he said. "A producer that sold me 40 MMcf/d Monday into Channel said he could spare only 5 MMcf/d there today [Tuesday]. He was taking the rest elsewhere for a better price."

There was still volatility in cash trading but it generally stayed within a specific range, one source said. He saw Chicago citygates start a little more than a nickel down at $1.93-94, rebound to a flat $2, then fall back to around $1.97 in late trades.

A marketer reported a lot of people, such as end-users, are finishing up their storage requirements. However, April is still a withdrawal month on the Northern Natural Gas system, he said, so "we're seeing a lot of guys trying to clean that stuff up [complete withdrawals from NNG storage]."

Several traders have observed gas load being supported in recent weeks by nuclear plants going down for refueling in preparation for summer power demand. In a twist on that situation, Chicago-area Commonwealth Edison said Tuesday 1,078-megawatt Unit 2 at LaSalle nuclear station near Marseilles, IL could return to service soon and be at full power by late April or early May. The twist is that the unit has been down since September 1996.

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