A Few Northeast Citygates Again Defy Softer Trend
For the most part, a bearish trend in the fading December swing market once again held sway Thursday. With the continuing exception of rises at some Northeast citygates, most points registered price drops between about a dime and 50 cents. California, Sumas and Transco Zone 6 (non-NYC) led the way with triple-digit declines.
Although northern market areas are expected to remain below freezing through the New Year's Day weekend, a relative warming trend in other regions, particularly in the Southwest, helped drag prices further down, sources said. The February futures contract had little influence on cash as it spent part of the morning mildly softer, then managed to achieve a slightly positive position before ending the day down a little more than 2 cents.
A Transco Zone 6 (NYC) buyer replied with a sarcastic "whoopee!" when told his market had replaced California as the one with the most expensive gas in the last couple of days. "It beats me" why Zone 6-NYC is costing so much more than other regional citygates, he said, because there are no constraints of much significance on Transco. Although Thursday's $26 peak came nowhere near matching the late spike to $37 on Wednesday, the average rose by about a dollar and a half to a point-specific record of more than $21.
Although Nicor had not declared a Critical Day as of Thursday afternoon, a couple of sources confirmed that the Chicago-area LDC was advising customers to have their pagers handy this weekend. It had some people in a mild panic over what "might happen [with the weather] over the weekend," one said.
The big crash in Sumas prices recently (and to a lesser extent at Stanfield) was partly due to moderating weather, but also was influenced heavily by pipeline actions. Northwest has lowered the required percentage of north-end receipts under a "must-flow OFO" from 25% to 10% (see Transportation Notes). And since Christmas Day, when a pack tolerance of 20% was still in effect and draft tolerance was zero, Westcoast has reversed those numbers to zero and 20% respectively.
A number of traders bid adieu to the December 2000 swing market Thursday, reporting deals that were scheduled for flow through Sunday. One who did Friday-only deals expects it to be "kind of messy" today trading separately for the Saturday-Sunday and Monday-Tuesday periods.
A tendency toward indexed deals with hefty premiums began during the December bidweek in California, where so many national trends originate. It's now happening on the other coast, where one source reported several purchases at a Transco Zone 6-NYC index plus $1.50-2.00.
A buyer at the Chicago citygate said, "In a way I got my belated Christmas wish by waiting for January prices to soften." He made purchases Thursday at the GPI index plus a nickel, which compared with reports of deals at GPI index plus 40-50 cents earlier this week. (One trader said he heard a NIPSCO deal was done at index plus $1.10.) However, another Midwestern trader said he was seeing little change Thursday in January fixed prices.
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