Prices Dive Due to Warmer Forecasts, Screen Plunge
Weather remained cold Tuesday over most of the East, but predictions of at least a moderate warming trend developing and a huge plunge in futures were enough to spur the cash market to make a steep descent of its own. Dollar-plus declines were common. Transco Zone 6 (NYC) fell nearly 20 dollars, yet still reigned as the costliest price point with an average of more than $18.
It was a very quiet market to begin the new year, one trader said. Cash started out very weak because of the big Nymex decline, she added, and the forecasts of warmer weather kept the price rout going. However, the trader reported some major demand at Waha and El Paso's Keystone pool in Permian Basin, causing prices to run up about $1.35 from where they started the morning. However, she sees little chance of the run-up continuing due to the weather outlook.
With essentially flat numbers, Iroquois Zone 2 was conspicuous among the much softer citygates at other Northeast points. TransCanada said it had determined there was insufficient capacity to meet all FT requested for delivery at the East Hereford, PQ terminus of its TQM Pipeline where the compressor station exploded Thursday afternoon (see Daily GPI, Jan. 2). An associated force majeure was declared Friday and FT nominations were being prorated at East Hereford, TransCanada said. There was no change in the station's status as of Tuesday afternoon, a TQM official said, but the condition of the injured employee was much improved.
Speaking on conditions of anonymity, one trader said his company was among a group of suppliers who won't sell gas to Pacific Gas & Electric until the big utility gets its financial house in order again (see Daily GPI, Jan. 2). "It's purely a matter of creditworthiness to our accountants," he said. "PG&E's got everybody very nervous about the prices they've been paying for power recently." A Calgary source said he knew little about the situation because he does almost no direct business with PG&E. Although he trades regularly at Malin and the PG&E citygate, PG&E does little purchasing at those points, he said. Since it controls so much capacity on pipeline affiliate PG&E Gas Transmission-Northwest, the utility prefers to buy in Alberta and transport the gas, he said.
A trader for a large aggregator said his staff is expecting AGA to report a storage withdrawal of 170-180 Bcf this afternoon. Despite the extreme cold of the between-the-holidays week, "LDCs have to be really concerned about about using up too much storage while they're still in December," he said. For that reason, "I don't think we'll see any 200 Bcf-plus pulls for a while yet."
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