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Both May and June Numbers Flat to Slightly Higher

Both May and June Numbers Flat to Slightly Higher

June bidweek activity heightened considerably Thursday as traders sprinted toward the finish line, either trying to wind up everything Thursday or leave only a few tail-end deals to complete today. A marketer who made six Chicago citygate deals in a very tight range on either side of $2.30 said June prices were just barely higher despite a gain of more than a nickel in the July Henry Hub futures contract. He thought the lack of volatility was due to many people leaving early for a long weekend. If more traders were still around and working there would be more input and breadth to the ranges.

A California buyer came up with a rather innovative structuring of June supply. She bought 5 MMcf/d at GPI's Southern California border index plus 0.25 for seven-day-a-week deliveries. However, another package of 5 MMcf/d will be at the GPI index plus 0.5; she paid a slightly higher premium to take that gas on weekdays only. That was done to avoid potential oversupply penalties on weekends, she said.

The late-May swing market was dwindling rapidly to no one's surprise. Nearly all points ranged from flat to about a couple of cents higher. Sumas and Westcoast Station 2, though trading approximately flat most of the morning, got "hammered" at the end as there seemed to be more and more long supply positions emerging, a marketer said. But the late weakness at those British Columbia points failed to carry over into neighboring province of Alberta, where quotes went up a couple of pennies. A Calgary source said she was "anticipating, although I'm not sure that's the right word," the big NOVA outages starting Monday that will take about 940 MMcf/d off the market through June 9. That should keep the intra-Alberta market strong through the first week and a half of June, she said.

Despite a San Juan Basin supply disruption of about 270 MMcf/d that was extended through at least today when El Paso was unable to complete Blanco Plant maintenance as scheduled Thursday (see Transportation Notes), San Juan swing quotes were unable to derive any support from it, ranging from flat to slightly lower.

There was a consensus that today's swing quotes for the weekend are going to be "dismal," as one source expressed it. A Houston-based producer expects some rebound in prices after the holiday but thinks they basically "will continue to be led around by the screen." But an Eastern marketer looks for the post-holiday market to enter a consolidation phase, predicting "we'll test new lows before getting higher towards the end of June."

A number of Canadian traders are looking forward to their second straight long holiday weekend. A couple of Calgary sources noted that in addition to last Monday's Victoria Day, they also will be off for Memorial Day. After all, as one observed, "We figure the gas market will be extremely quiet with all the Americans out."

This market has been so boring recently, a Midwest marketer said, that "I think we need a hurricane to get things stirred up." Her remark was timely, because June 1 marks the official start of the 1999 hurricane season.

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