The cash market remained on its uphill trek at all points Wednesday except for the OFO-devastated PG&E citygate, but price increases continued to get smaller than those earlier in the week. A substantial majority of upticks were between 10 and 20 cents.
Fundamental price support in the form of hot weather in many regions was still strong, but several sources felt that might be insufficient to keep the rally going in the aftermath of another large-volume storage injection report and a futures drop of nearly 20 cents.
“It’s a good question about whether there will be enough heating load the rest of this week to counteract the screen and storage bearishness and keep cash prices from crashing,” commented a Gulf Coast trader. “Certainly we’re not seeing as much storage buying interest as we had been previously.” He said he wasn’t really surprised by the radical turnaround in the storage situation since last winter when so many people were worrying that an adequate refill for the next winter might not be possible. “Gas lost so much market from fertilizer and chemical companies that quit buying when prices were super-high,” the trader said, “and that left plenty of supply available for storage injections this spring.”
A western marketer reported a modest supply squeeze in late activity in the San Juan-Blanco pool. It sent prices that had been around $2.80 at first as high as the $3.20s, he said, but he believed only a relatively small volume got traded at the upper levels. Waha also popped up strongly in response to heavy air conditioning load in Texas, he said. “We made several sales to TUFCO,” the gas supply arm of TXU.
PG&E citygate numbers got hammered downward by about a dollar when the utility issued a high-linepack OFO for today (see Transportation Notes). Border-PG&E quotes fell into the $3.50s, a marketer said, but Malin and border-SoCalGas deliveries managed gains on the day. “The OFO was the big gas market story in California, but people continue to marvel about electricity in the state being about as cheap as anybody can remember in many months,” he said, reporting day-ahead on-peak power selling for around $55-60/MWh in the Golden State.
Even as widespread warming trends were getting credit for providing fundamental support for higher gas prices, the year 2001 continued to demonstrate a penchant for weather extremes. A storm that brought several inches of snow to Montana knocked out electric service in many parts of the state, with the Bozeman area being hit hardest, according to Montana Power. That and generally cold temperatures in other parts of the upper Rockies created cooling load that boosted prices on pipes in the region and helped them avoid the PG&E OFO price depressant.
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