A great deal of cooling load across the southern tier of states combined with a moderate amount of heating load in the Northeast and (to a lesser degree) Midwest to produce rising prices at nearly all points Tuesday. A 6.4-cent screen gain the day before added a little extra impetus to the bullish cash market.
Upticks ranged from barely higher in a couple of cases to nearly a quarter. Increases in the West and Midcontinent, which had generally been among Monday’s biggest, instead became the weakest overall Tuesday.
The Southwest market, which had been the strongest performer in the previous two trading sessions, apparently had already wrung most of the price-boosting support it could from recent record-breaking heat levels in the region. Waha and Permian Basin numbers, which have been experiencing heavy power generation load to both the east and west of them, only went up a couple of pennies or so. And El Paso North Baja/Ehrenberg saw Tuesday’s sole loss of about a dime.
Despite Tuesday’s increases, swing prices were still nearly a dime or more below first-of-month indexes as the end of May draws near. A large majority of points were running double-digit deficits to index that ranged as high as about a dollar at the PG&E citygate.
A Texas marketer observed that Waha has experienced a lot of power generation load in the daily market recently, but that such demand could be easing soon as the Lone Star state is due to be cooling off a bit by the end of the week.
Electricity producing demand is already on the wane in parts of the Southeast. Much of the region “will enjoy beautiful weather with abundant sunshine, moderate humidity and high temperatures in the 70s and 80s” Wednesday, according to The Weather Channel (TWC).
Meanwhile, a late-season Nor’easter will remain in the region that originated the name through at least Wednesday, with high temperatures as much as 20 degrees below late-May norms, TWC said.
“For sure, there are furnaces running in the Northeast,” said a trader in the region. Nor’easters usually happen during the winter, but this is a late one that’s basically a stalled low-pressure system that’s causing low temperature anomalies, he said. “It’s pretty cool in the East and hot in the South,” he went on, so it was hardly surprising that cash quotes rose. However, he noted that June futures looked oversold and came off Tuesday, which could indicate some retrenchment in cash Wednesday.
With nighttime lows sinking into the 40s, an Upper Midwest marketer said she was sure that some people in her area also were still turning on their furnaces, although she didn’t perceive the heating load as being very substantial.
A trader who markets gas on behalf of independent producers wondered why TGT Zone 1 was so strong. It and the pipeline’s Zone SL often are priced the same and in recent weeks have only rarely varied by more than a penny or two, she noted, but on Tuesday Zone 1 was nearly a nickel above Zone SL. “I heard from someone who was buying SL gas and turning it around to sell in Zone 1” for a cool nickel profit, she said, adding that she presumed the Zone 1 sales were for storage.
It’s a slow bidweek so far, the trader continued, echoing the opinions of other sources. She was seeing indications that June indexed deals on Sonat would be at index flat to slight premiums, saying she saw it offered at index plus 1.25 cents and bid at minus 0.25 cent. Several of her usual trading counterparties weren’t in Tuesday and wouldn’t start bidweek business until Wednesday, she added.
A Midcontinent marketer offered these sampings of June deals done Tuesday: ANR Southwest, $5.85-88; Northern Natural-demarc, $5.90-6.04; Waha, $5.71-84, and Southern Star Central (formerly Williams), $5.85-86. It was hard to tell from the two pipes with narrow ranges, but demarc and Waha were trending lower through the day, presumably in sympathy with screen weakness, she said.
A Midwestern buyer said she planned to make her MichCon and Consumers Energy citygate purchases on the basis of the average of the last three days of June futures, adding that she was hearing basis of around plus 19 cents for both Michigan utilities. At least the screen was coming her way Tuesday, she said, but added that there’s still two days to go before settlement.
A Northeast marketer said he hadn’t done any June deals yet, but was aware of Texas Eastern M-3 going through at basis of plus 48-49 cents, while Algonquin citygate and Tennessee Zone 6 were being done at basis of plus low 50s cents.
Analysts Thomas Driscoll of Lehman Brothers and Kyle Cooper of Citigroup submitted estimates of the upcoming storage report as builds of a flat (from the previous week) 90 Bcf and 92-102 Bcf respectively.
Â©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |