Price Hikes Backed by Futures, Supply Tightness
The cash market resumed its climb Thursday, buoyed by a rising
Henry Hub futures contract, a tightening supply situation,
spreading cold weather and air conditioning load from Texas through
the Southeast. A "lean" storage report Wednesday afternoon added to
bullish sentiment, a marketer said.
Broad-based gains were scattered between a nickel and a dime.
The surge left only a few Pacific Northwest and Rockies quotes
still under the $2 level. A cold front that had chilled the Rockies
on Wednesday was moving into the Upper Midwest Thursday, resulting
in upticks of close to a dime at many Midcontinent field and
Midwest citygate points.
Tightness of supplies in the Gulf Coast seems to be getting more
pronounced each day, said a Houston marketer, noting he is among
the shippers running a "significant" negative imbalance on Transco
(see Transportation Notes). That tightness is exacerbated by
Northeast electric utilities continuing to switch from fuel oil to
gas as crude futures remain near $18/bbl, he said. In addition, the
marketer added, the MW outage of nuclear plants nationwide is 18%
greater this spring than last. (FirstEnergy's Davis-Besse plant in
Oak Harbor, OH, is the latest nuke outage, beginning a 25-day
maintenance period today.)
Among the reasons people are noticing more supply shortages at
Louisiana points lately is that Texas and Louisiana prices have
reached approximate parity, one source noted. Some traders that had
been bringing Texas gas across the Sabine River to sell at
Louisiana points while Texas prices were lower, have now turned to
making their purchases in Louisiana instead, he said.
CIG-DJ Basin was the rare market making no new gains Thursday,
probably because its run-up of about 20 cents the previous day had
easily topped a mostly flat market.
A Texas source regarded the AGA storage injection figure of 2
Bcf as "very bullish," but doesn't think those feelings will last
long. He looks for a "big" injection report next week.
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