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Western Warm-up Throws a Chill on Gas Prices

Western Warm-up Throws a Chill on Gas Prices

Cash prices staged a broad-based retreat Monday, giving up 3-5 cents at most Eastern points with Western declines tending to be larger at a nickel or more. The market lost some of last week's fundamental support as a warming trend started to develop in the West, sources said. In addition, although the Henry Hub futures contract for May later reversed field and achieved an overall gain for the day, its weakness in the morning rubbed off on cash trading.

"I bet a lot of people are scratching various parts of their anatomies wondering why this screen is so high," said a Midcontinent trader of the afternoon rebound in futures. When screen momentum gets going, cash follows along pretty soon, he added, so he expects cash prices to hold up either flat or a bit higher today.

Although it was still fairly warm in the South Monday, gas prices should lose some more basis support as regional temperatures cool off this week, a producer said. However, Zone 2 prices into Florida Gas Transmission (high $2.00s) again topped the Gulf Coast, not only because gas demand for peaking power generation remained strong in the Florida peninsula but because the pipeline's entire upstream Zone 1 will be shut in today through Thursday (see Daily GPI, April 9). One trader reported hearing FGT-Zone 2 offers at $2.12 but wasn't sure how much gas might have traded at that level.

Intra-day trading was heavier than usual, according to a Northeast trader who thought utilities in the area might have underestimated their weekend needs and were having to catch up on supply. Appalachian and Northeast citygate numbers fell only 2-3 cents.

The fact that NOVA continued to restrict firm service deliveries at the Eastern Gate to 94% of normal capacity was causing supply problems, a marketer said. Whatever intra-Alberta gas was able to get through the provincial border export point held its value fairly well, trading mostly flat in the C$2.50-51 area, he said. The same could not be said of another Canadian export point-Sumas-which succumbed to the drop in Western heating load with a price fall of about a dime. The domestic product into Northwest fell almost as far (about 7 cents).

For several sources, Monday seemed like a return to the slow, quiet trading mood that characterized much of March's activity. Undoubtedly many would agree with the Midwestern source who observed, "It's a slow afternoon, there's beautiful weather here, and I should be out golfing."

General Midcontinent basis for May was quoted at minus 10-11. A Calgary trader said he was doing intra-Alberta deals for May at C$2.54, about C3-4 cents above Monday's April swing.

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