Buyers appeared to be winning most of the price standoffs inlate bidweek business Thursday. Michigan citygates were down to thelow $1.90s after deals had been done earlier in the mid $1.90s, amarketer said. Another felt it odd to see Michigan trading at aslightly negative basis for a change after hitting plus 24-25 insome cases last winter. But several traders agreed there’s nomystery to the basis weakness; “it’s all that storage” in thestate, one commented. We’ll continue to see Michigan beingdiscounted relative to Chicago deliveries for quite a while, againfor the storage reason, he said.
A Gulf Coast/Midcontinent marketer cited high overall storagelevels as a reason for August prices Thursday being as much as anickel less than on the day before. And there was a double-whammyon prices from the abundance of released transportation capacity,he said, because many people just couldn’t afford the variablecosts of hauling the gas.
One exception to the softening trend in August business was theSouthern California border. After falling a couple of cents intothe high $2.20s Wednesday due to the futures screen’s fall,Thursday quotes had moved up into the low $2.30s. A buyer said hesuspended purchases after a $2.30 border package when offers wentas high as $2.35 Thursday. “I’ll wait till Friday [to finish] andgive this market a chance to relax,” he said.
Sources reported mixed feelings on the initial Augustaftermarket. A Southwest marketer perceived “a little nervousnessabout going short into the weekend” because of all the hot weatherstill hanging around in the West. Another trader in the same areawasn’t so sure. “For the first few days of the month I think peoplewill wish they were short,” he said, but acknowledged that asCalifornia continues to heat up it will put pressure on Westernprices to move higher.
The aftermarket mood was more bearish to the East. A marketercited the below-normal temperatures in the Midwest. And an EastCoast utility buyer told Daily GPI, “A lot of people are trying tosell me baseload; they must be pretty bearish. I can’t wait to seewhat happens next week!”
A trader in Western markets wondered why there seemed to be goodJuly-August convergence everywhere except at San Juan-Blanco, wherehis mid $1.80s end-of-July deal was about a nickel above bidweeklevels.
Activity for last-of-July flow was predictably light, and pricesreflected the near-afterthought nature of trading with littlemovement up or down. Most of the softness occurred on pipessupplying the Midwest market area, which was pervaded by anunseasonable cool front. Quotes on the Midcontinent’s ANR andPanhandle Eastern, and on Trunkline’s East Louisiana pool, fellabout a nickel.
Tropical Storm Alex continued to move westward and was up to 50mph winds Thursday, but further strengthening will be slow, aforecasting service said.
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