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Strong Gains Bring Some Points Back to Index

Strong Gains Bring Some Points Back to Index

It didn't take long for those predicting that May swing prices would remain under index levels all month to have to eat their words. Not all points matched indexes again Tuesday, but quite a few did in a general show of strength by the cash market, and the rest were coming close. Most gains were in the vicinity of a dime, but those in the Rockies and California markets tended to be closer to a nickel or so.

Sources mostly credited "following the screen" higher for the cash upticks because, as one Gulf Coast trader put it, "there's been no change in relatively weak fundamentals." Cash had a wake-up call from the futures trading pit to answer, he said. Cash market activity was sort of lethargic at first but then drove prices higher throughout the rest of the morning, he added. His Henry Hub deals began at $2.28 and wound up at $2.34.

Somewhat fittingly, since its dime-plus increases Monday had sharply contrasted with a mostly softer market that day, San Juan Basin registered Tuesday's lowest gains of about 2-3 cents. Maintenance outages ended at Williams Field Services' Ignacio Plant and BP Amoco's Florida Plant, putting a huge chunk of San Juan gas back up for grabs for today's gas flow.

Though the volumes weren't all that big, a marketer reported seeing "fairly good buying" into El Paso by all the California and east-of-California utilities. Besides the screen influence, he felt a lot of buyers may have entered May with short supply positions because they expected lower swing pricing, "and now they're finding prices not quite as soft as they thought."

A Midcontinent source was hearing predictions of 40-50 Bcf in injections for AGA's report this afternoon of storage activity last week. "Anything close to zero will start a bull run, and anything near 100 will let the bears run loose," but it will take extremes such as that to have any significant impact on the market, he said.

The Northwest Pipeline bulletin board Tuesday reported a withdrawal of more than 100 MMcf from the Jackson Prairie storage facility during Monday's gas day, similar to last week's activity (see Daily GPI, April 29). That wasn't hard to understand, though, a marketer said, since the Pacific Northwest is still seeing both heating and power generation load because of chilly weather and a related delay in strong hydropower production.

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