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San Juan Spike Stands Out in Mostly Lower Market

San Juan Spike Stands Out in Mostly Lower Market

Most of the cash market continued to sink a few cents lower Monday in price showings that ranged from essentially flat to down more than a dime on ANR's Southeast Mainline, which is experiencing a capacity curtailment of about 100 MMcf/d during May due to compressor maintenance.

But just as a transportation constraint caused ANR-Southeast prices to fall 11 cents, a supply shortfall caused San Juan Basin prices to soar higher by a like amount. A one-day annual maintenance shutdown at Williams Field Services' Ignacio Plant, which usually occurs during the first week of each May, is limiting the plant to about 125 MMcf/d of production for today's gas day, about 400 MMcf/d under its recent average, a WFS spokesman said. However, those lost volumes will begin returning quickly at the start of Wednesday's gas day, he added.

The supply squeeze took Blanco pool prices as high as $2.04 Monday, although a marketer reported that the last trade of the day on an electronic service had retreated slightly to $2.00.

In addition to the San Juan strength, Western points in general managed flat to slightly higher performances or fell no more than a couple of cents. Chilly weather is still lingering in the region, and the much heralded onslaught of hydropower production, which is expected to take a large bite out of gas load for power generation, was still in abeyance for the most part. It remains cold enough in the Pacific Northwest that little mountain snowmelt has occurred, so hydro hasn't come on strong yet, one source said. But when it does, "watch out for falling [gas] prices."

A Texas producer, not liking the market outlook, didn't bother to do any fixed-price deals. "What we need is some heat in Texas," he said, speculating that maybe heat will arrive after a broad area of thunderstorms pulls out of the state. But another trader doesn't expect any serious air conditioning load anytime soon, saying she thinks it won't get "real warm" around Houston until the last half of May.

It's kind of like "toss a coin and make your guess" about whether cash will rebound today, a marketer said. However, there are so many long positions in the Nymex futures trading pit that she expects the screen to either keep cash gas from rising or even drag it lower.

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