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Gulf Prices Sag After Screen Retreats From Peak

Gulf Prices Sag After Screen Retreats From Peak

May prices remained firm in morning business Thursday but were getting softer in the afternoon after the June futures screen started retreating from a dalliance around the $2.40 level, a Gulf Coast producer reported. However, a marketer saw little movement either way for May numbers in western markets. And another trader said intra-Alberta prices "are getting wild," reporting them straddling the C$2.80 level Thursday.

Barring any radical late changes, it appears that May indexes will be up 30-40 cents or more from April's. One source cited two major factors in the gas market's current bullish tone: (1) The year-on-year storage surplus, which had seemed so overwhelming as little as a month or two ago, has been declining rapidly at the same time that deliverability constraints resulting from 1998's drilling cutbacks have been showing up for many traders. (2) Crude oil prices remained above $18/bbl last week and show little sign of collapsing back to the sub-$11 levels that existed earlier this year.

A buyer who paid in the mid $1.90s for gas into CIG-North System said supplies seemed fairly tight. "I had a couple of other deals snapped up by someone else before I could pull the trigger," he said, expressing amazement at Rockies prices for May climbing more than 40 cents above April indexes.

A Rockies trader sees little risk in going into May on the short side. The Pacific Northwest is due to warm up around May 5, he said, and when that happens mountain snow will start to melt and give a boost to hydropower production. He looks for western prices to fall as hydropower displaces a large amount of electric generation load for gas.

May should be an interesting month for Southwest markets due to the unusually high level of scheduled maintenance, a marketer said. Conoco's Blanco (NM) processing plant will be down 100% May 11-13 and at a fraction of normal capacity for some days after that, he said. Williams will be performing some plant maintenance in the same area, the marketer added, and El Paso has a heavy schedule of May maintenance.

Last-gasp April trading saw numerals in the price change column that closely resembled those of the day before, but this time they had plus signs in front instead of minus signs. Most points were flat to 3-4 cents higher. Northern Natural Gas was the only pipe recording nickel-plus gains at all three major trading points-field, demarcation point and Ventura. Everybody wanted to get daily swing deals done quickly in order to finish May business, an aggregator said.

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