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Prices a Bit Softer; Most Points Near or Above Index

Prices a Bit Softer; Most Points Near or Above Index

The majority of cash points were down a few cents Thursday but still sticking around in the vicinity of index levels. Despite some negative influences, the California market even managed to maintain at least a nickel premium to index. Even with a huge swath of rain having a cooling effect on the Midwest and Northeast market areas, heat remained the big reason for only a modestly softer aftermarket. A screen drop of almost 9 cents had little impact on cash.

A Chicago trader quoting citygates around $2.30 said it was a quiet day because a lot of people had already done swing deals through July 6. Other sources also reported light activity. Early on prices were off in the Northeast, a marketer said, but later a few buyers showed up short and generated a small rebound.

A System Underrun Limitation extension by Northern Natural Gas (see Transportation Notes) was not causing any problem yet, said a trader quoting demarc prices flat to a penny or so down in the low $2.20s. However, since the SUL will last at least through Sunday, problems could surface today, he said.

California was a strange market in bucking logical tendencies, a couple of sources agreed. Even with a cooling trend starting in the Golden State, an OFO-like Overnominations Day limiting deliveries into the Southern California Gas system and Pacific Gas & Electric continuing to project excess linepack through Sunday, prices remained a nickel or more above index at all three major pricing points (Malin, PG&E citygate and Southern California border). One trader didn't believe the PG&E linepack warning was serious because a pigging operation starting today on PG&E Gas Transmission-Northwest will limit deliveries at Malin, he said.

Meanwhile SoCal Gas was riling at least one marketer, who said the giant LDC gave no advance warning of the OFO and then came out and bought gas itself at lower prices after news of the OFO got around. Pretty much all of the day's trading had already occurred by then, "so what you got was pre-OFO quotes," she told Daily GPI. Instead of penalties, SoCal just buys any overdelivered gas from the offending party, she said, recalling that a purchase price of 88 cents/Mcf was in effect during an April OD.

Based on weather forecasts, "I don't think people will want to go home [today] in short positions," a Midcontinent trader said. For that reason he saw good chance for moderate firmness in weekend prices.

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