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Some Points Exceed Index Levels by a Dime

Some Points Exceed Index Levels by a Dime

The cash market continued Tuesday to show the same signs of aftermarket strength-and even more in some cases-that it did last Friday in swing deals done for June 1 only. Many of the Gulf Coast pipes were trading about a dime above indexes, and most other points were at least a nickel above indexes. However, some traders didn't expect the higher prices to last, noting late softness in some markets such as Chicago.

More than one source expressed amazement at Chicago citygates trading even with or below Henry Hub (Chicago led by 6 cents in June indexes). One said he averaged $2.33-34 at the citygate before the numbers started "cratering" in late activity. With cash numbers moving so low, "the strategy right now is to hide it [gas] if you can," he added. A marketer who regretted going into the month long in the Chicago market said he had some trouble getting rid of supplies in late deals.

Air conditioning load has yet to have a big impact on the cash market but it's getting close, said a Houston-based source noting local forecasts for high temperatures in the 90s this week.

A western marketer was surprised at the market's relative post-holiday strength. Pacific Gas & Electric's high-inventory Stage 1 OFO, which was in effect Monday and Tuesday but not extended to today, "did not have the price softening effect that I thought it would," he said. But according to another trader, it's only a matter of time before prices in the West get weaker and have a dampening effect on the overall market. Long-delayed mountain snowmelt is gaining momentum in the Pacific Northwest, he said, and hydropower output increasingly will displace gas-fired electric generation.

A Gulf Coast trader reported hearing guesses of 75-85 Bcf in this afternoon's AGA storage injection report, compared to a year-ago figure of 106 Bcf. If the report comes in below 75 Bcf, "we're expecting July futures to jump to about $2.50."

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