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Market Slide Comes to End With Modest Upturn

Market Slide Comes to End With Modest Upturn

The moderate price slide that defined much of the cash market since late last week reached a plateau Tuesday as flat to slightly higher pricing dominated reports. The correlation of cash movement with a tight-ranged screen was very high, sources said. A gradual warming trend was just starting to be felt in the major market areas of the Midwest and Northeast, they added, but it was lending support to small price increases at citygates and in the Gulf Coast and Midcontinent regions.

All points were near their highs at the end of the trading session, according to a Gulf/Appalachian marketer. That was definitely due to a short supply squeeze developing as Northeast buyers got more active, he commented. The marketer said he could detect by the pattern of buying that some nuclear plants in the market area are underperforming. However, he noted, until now the utilities mostly have been rewarded over the last week by waiting for higher prices.

One trader believed South Texas prices into Texas Eastern were strong and keeping pace with many non-premium Louisiana points because of Line 41 in the pipe's West Louisiana pool being out of service through Sunday. In a related South Texas note, a marketer said a pig stuck in the pipeline was restricting deliveries from Channel and HPL into Florida Gas Transmission-Zone 1. "We just missed getting cut [Tuesday], but have already told we will be cut [Wednesday]," she said.

Power generation load remains somewhat depressed in much of Texas, a Houston-based trader said. "It's just not hot anywhere with all these thunderstorms," he added.

Oklahoma intrastate prices are starting to see a premium to neighboring interstates because Oklahoma Gas & Electric has been a significant buyer in the last several days after losing a coal plant in a tornado recently, a Midcontinent source said.

A marketer was unsure what market impact a Transwestern cessation of California border deliveries at Topock (see Transportation Notes) starting Friday might have but thought it likely would be "little to none" over the low-demand weekend. However, because the outage will constrain 400 MMcf/d at the border through the end of the month, she saw a chance of it boosting prices next Monday and Tuesday for El Paso border deliveries and in the Rockies and western Canada.

A Calgary trader reported seeing a "lot of apathy" for the July market so far; "to us, most people are bearish" because of forecasts for cooler weather in the Pacific Northwest early next month.

One aggregator reported doing July basis deals Tuesday at plus 10.75-11 for Columbia/Appalachia and plus 17.75-18.25 for Texas Eastern M-3. However, he was starting to "wonder what people are going to do with gas for the first six days of July with all the holiday-related plant closings." That may be a good argument for postponing most baseload until after the July Fourth holiday weekend, he said.

A couple of sources, one in the Gulf Coast and the other in the Midcontinent, agreed that index premiums for July essentially no longer exist, with the Gulf trader remarking, "They are disappearing right in front of my eyes." Last week almost the entire Gulf Coast market was being talked up at index plus 0.25-0.5, she said. "Now you are hearing index flat or index minus." That is forcing some sellers to think seriously about taking their chances with the aftermarket, she said. The Midcontinent source said brokers were making offers at index minus 0.75. Bidweek is shaping up to be a real "test of nerves," he concluded.

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