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Weekend Market Sags, But 1st-Only Gas Near Indexes

Weekend Market Sags, But 1st-Only Gas Near Indexes

As expected, cash prices for the long weekend that ended May were down across the board Friday, although not by as much at some points as sources had expected. A strong performance by the Henry Hub futures contract for July largely failed to counteract a lot of mild weather and the gas demand slump that nearly always accompanies a holiday period. The changes varied widely from barely off a penny or two to as much as 15 cents down, with almost every degree in between represented.

However, the softer trend reversed in most markets as swing flow dates crossed over into the 1st of June. Deals done Friday for Tuesday-only often were in the approximate vicinity of June bidweek indexes and were a bit higher in a few cases. A Midcontinent marketer said he didn't see much difference at first Friday between weekend and Tuesday numbers, but then Tuesday quotes began rising chiefly due to the screen uptick. He pointed out that 1st-only swing could be traded into the afternoon beyond the normal 11:30 CDT nominations deadline and thus late deals were greatly influenced by the Nymex action.

The biggest weekend drop of about 15 cents came in San Juan Basin despite El Paso's announcement that a delay in completing Blanco Plant maintenance would extend a 270 MMcf/d supply cut through Monday and possibly into June (see Transportation Notes).

Weekend swing gas was all over the place, said a Gulf Coast/Appalachia trader quoting ranges of about a dime or more. Prices were at their lows in the first 20 minutes and rapidly rising toward their highs thereafter, he said. A lot of buyers were confident of being able to buy heavily discounted gas for storage over the weekend, he went on, figuring to take advantage of the 50 cents-plus gap between early Henry Hub pricing around $2.20 and January futures trading above $2.70. "But too many of them were thinking alike, and that pushed swing back up" from the early depths, the trader concluded.

A lot of people had incentive to go long on physical gas on several Gulf Coast pipes because of cash-out prices above the prevailing market levels for late-month swing, a Texas marketer said. But those pipes were worried about being oversupplied for the Memorial Day weekend and threatening to issue OFOs if necessary to keep shippers from banking gas on-system, she added.

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