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Screen Gets Most Credit for Strong Swing Quotes

Screen Gets Most Credit for Strong Swing Quotes

As the countdown to today's May futures expiry continued Tuesday, swing cash prices certainly did their part to encourage the bulls in Nymex's trading pit. But in a form of reciprocating support, sources said late-April price rises of about a dime in most markets were based almost solely on screen upticks Monday and Tuesday. Except for moderate air conditioning load in Texas and the Southeast and a bit of lingering chill in the West, weather fundamentals were almost non-existent, they said.

Although increases of a dime or more made Midwest citygates among the day's strongest trading points, Midcontinent field prices tended to lag the overall market with several pipes little more than a nickel higher. The Midcontinent tried to start nearly a dime up but quickly faded back a few cents, one marketer said. Noting the citygate strength, she suggested that maybe the economics of transporting field gas made it a better strategy to fulfill Midwest demand from storage. In addition, since the West is no longer as cold as it was earlier this month, it's likely that more Rockies gas is flowing east into the Midcontinent/Midwest market, she said.

May basis appeared to be a tale of two regions Tuesday. Gulf Coast basis is remaining very tight, said a trader who perceived basis for Agua Dulce, Katy and Houston Ship Channel as a penny tighter than usual. And a Florida Gas Transmission trader said that pipe's basis is strong because of "extra-tight capacity" on the system, which he called very unusual for this time of year.

But a producer said Southwest basis is widening due to the screen's rise and also to the expectations of hydropower figuring more and more prominently into the West's electric generation mix as May proceeds. He pegged new basis Tuesday at minus 16-17 for Permian Basin, minus 27-28 for San Juan-Blanco and minus 9-10 for Southern California border. Because of "a heck of a lot of maintenance" scheduled for May in San Juan Basin, the producer thinks California buyers are sourcing more May gas from the Permian Basin than they have in the past few years.

Convergence was working well for a marketer reporting California border prices for May in the mid $2.20s, only a penny or two less than his late-April swing numbers. But a Sumas trader said May prices there had slipped to $1.90-95, more than a nickel below his April quotes in the low $2.00s.

The contrast between this bidweek and the last one is readily apparent, a Midcontinent trader said. "If you look at April's bidweek, people couldn't give it [gas] away. To be short was to be envied," he said. "But with the price run-up during April, they've [short-position traders] been hammered. Now, in this bidweek, nobody wants to be caught like that again, so everybody is going long."

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