Zone 6-NYC Spikes to $37, But Most Prices Falling
Except for some upticks in San Juan Basin and at Northeast citygates (especially strong in both of Transco's Zone 6 pools), late-December swing prices stayed on a downhill slide Wednesday. Declines ranged from mildly softer to more than $2 lower at Stanfield, but most were within the range of 40-70 cents.
Although harsh winter weather remains in the near-term forecast for both the Midwest and Northeast, only the Northeast responded with higher prices. "The Zone 6 pools [on Transco] were definitely where most of the action was," said a marketer. New York City deliveries averaged less than $20, but spiked to a point-record $37, with quite a few $35 quotes also reported, as a supply squeeze developed near the end of trading.
AGA's report of 175 Bcf withdrawn from storage last week dovetailed nicely with prior expectations, but Nymex treated it bullishly to generate the highest contract expiration price ever. One cash trader commented, "That [175 Bcf] is a lot of gas, but not so much compared with how cold it seemed last week."
Moderate San Juan gains of close to 25 cents combined with a Southern California border plunge of $1.79 to reduce the border-basin spread to less than eight dollars for the first time in many weeks. One trader said his swing Topock deliveries at the California border dropped about a dollar and a half to the $16.08-18 range, and January quotes fell by about the same amount. "Many people, myself included, felt that January SoCal border [prices] would come up to meet December. Instead, it appears that December will be forced way down to converge with January."
Fixed prices for January remained slow in developing, although a western source said he knew of a PG&E citygate deal at $15.00. Basis was falling off more than the screen rose, a marketer said.
Because of the holidays, it seems like a considerably shorter bidweek than usual, a large aggregator said. He expected most business to be done Wednesday and today, with "mop-up" action Friday. Friday trading will be complicated both by the rush to get home for the New Year's weekend and the split in flow periods, he said.
The Northeast was joining California in getting unusually large basis quotes. One source reported Transco Zone 6 (NYC) at plus 550, Transco Zone 6 (non-NYC) at plus 350 and Texas Eastern M-3 at plus 300. Appalachian basis also was rising for January, he said with CNG at plus 89 and TCO at plus 55. Meanwhile, a Calgary trader quoted Malin at plus 460 and the SoCal border at plus 645.
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