Holiday Market Looks Stronger than Usual
Swing gas for today-only flow generally was down a little from
late-bidweek levels, but not in all cases. In fact, a Sumas trader
found his swing quotes running up to a nickel more than his July
baseload deals. And even at the points where there were slight
retreats, sources still viewed the aftermarket as starting off
fairly strong. Despite a stagnant August screen Wednesday, the same
thing that caused end-of-June and late-bidweek run-ups was credited
for the swing strength: oppressive heat almost everywhere that had
power plants straining to handle the air conditioning load.
It doesn't seem like this Fourth of July market will be nearly
as soft as usual, said a Houston-based producer. In previous years,
he recalled, holiday-period price drops could range up to 15 cents
or so, "but it looks much stronger this time."
Having a Canadian holiday today and a U.S. one Monday made for a
confusing array of trading patterns. Some quoted July 1st-only
deals, others 1st-2nd, and still others 1st-6th. And then there was
the Calgary marketer who said some trading partners insisted on
doing deals through July 5 only, "so it looks like I'll be back in
on Monday to re-trade this stuff."
A Texas source said he made sales to utilities for today only
but made his purchases through July 6 "because that's what
producers wanted." That gave him incentive to hope that prices
remain high through the weekend, "but even if they don't, I'll just
take the gas to storage."
It surprised a lot of people to see how strongly weekend pricing
is shaping up, according to a Gulf Coast marketer. "They thought
the price depressant of industrial shutdowns for the holiday
couldn't be overcome by weather, but for now it sure looks like
that's how it is," he said.
Western prices look to be a bit softer for early July than in
other areas. Cal-ISO, the California Independent System Operator,
said a Stage One Electrical Emergency was declared for Tuesday
afternoon only as a few cogeneration and other non-nuclear power
plants went down and decreased the state's electric operating
reserves below the 7% level. Reserves were sufficient again
Wednesday, a Cal-ISO spokesman said, and a cooling trend due to
start today should prevent any return of Tuesday's emergency.
Another indicator of western softness was that Pacific Gas &
Electric, while not declaring an OFO, projected a higher linepack
than its target through Saturday.
What about the rest of July, after the holiday is past? Besides
the forecasts of widespread heat, a marketer was bullish about
recent high electric prices and crude oil futures that went above
$19/bbl Wednesday. In fact, "it looks like the entire energy
complex is making gains," she said. But while acknowledging soaring
costs for electricity, a gas buyer offered this little shower of
ice water: "People do stupid things during bidweek; they assume
that these temperatures and power prices will persist through the
month." She was not among those people.
Bidweek wrapped up mostly on the high notes sounded Tuesday,
although a Gulf Coast marketer detected a bit of fallback as
Wednesday's final deadline approached.
©Copyright 1999 Intelligence Press Inc. All rights reserved. The
preceding news report may not be republished or redistributed, in
whole or in part, in any form, without prior written consent of
Intelligence Press, Inc.