Cash Swoons Under Weather, Weekend Lethargy
"The Three Stooges didn't fall as fast or as hard," one trader
remarked, as the usual weekend demand crunch, a bearish 6- to
10-day forecast and Thursday's futures market plunge were cited as
reasons for the nearly universal drops of over a nickel. New York
Citygate prices were among the hardest hit Friday, as Monday's
highpoint of $2.75 has given way to the mid $2.40s at the week's
A North Carolina-based buyer was not surprised by the market's
decline heading into the weekend. "I was forced into the market to
pick up some gas for peaking load earlier in the week, but have
been inactive since. Weather has moderated nicely and the forecast
is calling for more of the same," he added.
California prices were also driven down a dime or so Friday.
PG&E Citygate fell from the mid $2.40s to the mid $2.30s and
the SoCal border fell to the low $2.20s. "There is too much gas on
the system," one western trader said about PG&E. "They have
scheduled an OFO for Saturday because it is so overloaded, but that
happens every year at this time. Traders are also noticing that
it's warming up in the Northwest, so hydropower will start kicking
in soon." He added that trading was unusually slow, as many western
marketers had the day off to attend a Western Traders conference in
Santa Fe, NM.
Chicago prices fell into the mid $2.30s with Chicago Citygate
finishing the week at a 2 cent discount to Consumers Power. One
source was not surprised by the drop. "Chicago had been
artificially high all week. The weather was hot, but not hot enough
to sustain the kind of pricing we were seeing. There was one major
player out there buying all the Chicago gas he could muster. When
he stopped buying the prices fell.
Florida pipes ascended to the high $2.30s and low $2.40s earlier
this week, but thanks to Friday's drop, they are now trading in the
high $2.20s. One Florida-based trader thinks the decline will help
jump-start what has been a market devoid of buyers. "As the price
dropped, it started getting a little better. The utilities are
calling to try and bang out the lowest possible price using their
oil supply as leverage. Unfortunately, their demand goes down with
the weekend too. I suspect, the utilities will start coming around
early next week, now that Florida gas is in the high $2.20s.
For the bulls, all is not lost said Wayne Knupp, strategy leader
for Koch Trading. "On Monday, NEPOOL was selling electricity for
$850-$1000/MWh, which means every facility was running at maximum
strength," "That's a lot of gas being burned. It makes me think
next week's AGA storage report will be a whole lot more bullish
than this past week's report of a 91 Bcf injection."
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