Heat Keeps Eastern Points on Rise; West Slightly Weaker
Cash prices turned in mixed results Wednesday, with eastern
points mostly eking out small gains while the West tended to be
flat to off as much as 3 cents in the Rockies and at the two main
Northern California price points.
The screen gave a little support to cash, although a
Chicago-oriented trader said most of the futures rally came after
the cash market closed. But it was mostly the heat wave moving into
the Midwest after plaguing the Northeast earlier this week that
kept prices on the rise, sources said. Gulf Coast traders reported
moderate increases in power generation load, and demand from
Florida was strong enough to prompt an OFO declaration by Florida
Gas Transmission (see Transportation Notes).
The impact of air conditioning load was more pronounced in the
Midwest, where citygates registered some of Wednesday's biggest
gains of up to a nickel. Michigan and Chicago deliveries returned
to the vicinity of indexes in the low to mid $2.30s. In addition to
power generation demand, one marketer perceived storage injections
as still running strong and supporting prices.
However, a large producer labeled AGA's report of 78 Bcf in
storage injections last week a "non-event, in my opinion."
Weather is "quietly" supporting the market, asserted a Gulf
Coast marketer. Although current heat isn't as extreme as it was
over the Independence Day holiday weekend, he said, the Midwest and
Midcontinent are experiencing the longest period of sustained
normal and above-normal temperatures yet this summer. Basis, both
for next month and next year, is reacting accordingly by moving up,
he said. "Basis offers are getting lifted as opposed to bids
An intrastate Texas trader said he was making a lot of calls
about August business "but not getting any response yet." Many
suppliers were still trying to put their August production figures
together, he said. Meanwhile, bid and offer numbers appear to be
more than a penny apart, the trader said, and he was hearing
Houston Ship Channel basis at plus 1.75-2.
A producer reported making Panhandle Eastern basis sales at
minus 9.75 Tuesday and at minus 8.5 Wednesday, but said basis was
widening again Wednesday afternoon. He was hearing fixed-price
numbers around $2.16 for Panhandle and NGPL-Midcontinent. A western
source agreed that basis was widening as the screen went higher. He
pegged Sumas and Rockies pipes in general around $1.98-99 and Malin
Basis action was mostly tighter Wednesday to a Midcontinent
marketer who saw ANR trading at minus 8.5-9.5. Index premiums
started to show up, he said, citing an ANR sale at index plus 0.75.
Even though prices have been below index for most of July, the
marketer said, "buyers are acting like they need to own the gas in
August and don't want to get caught short."
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