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California Plunges Lead Continuing Price Softness
May aftermarket pricing continued to erode Tuesday nearly across the board. Most declines were between about a nickel and a little more than 20 cents, with a majority of them toward the upper end of that range. The non-Malin California points plunged more than a dollar.
The weak market status quo was virtually unchanged from the day before: mild weather in most regions; a softer screen; several pipelines struggling with excessive linepack; and anticipation of a big storage injection volume in this afternoon’s AGA report. No rebound is on the horizon at this point, a couple of sources said.
A Houston-based producer said prices sunk about a quarter at first, but that brought out a surge of late buying that brought many eastern points back up 7-8 cents. Another trader concurred, saying he saw some incremental demand building, as a bit of heat moves from the Ohio Valley toward the Northeast, “but there were plenty of sellers around” to meet that demand.
Although Tennessee rescinded a high-linepack OFO, Florida Gas Transmission stepped up with one of its own (see Transportation Notes). FGT has lost a lot of market area demand in recent weeks due to fuel oil prices that are substantially cheaper than gas, a marketer said.
Malin, which so often goes its own price way with little connection to movement in the rest of the market, was at it again with a rise of more than 20 cents for Tuesday’s only gain. However, the PG&E citygate and Southern California border deliveries responded to mild weather in the state with big drops that took them well below first-of-month indexes. In addition, PG&E, which until recently had linepack volumes in the vicinity of its minimum target level, was projecting Tuesday morning that linepack would rise above its maximum target level over the next few days. However, shippers must have responded to that notice because that afternoon the utility revised its forecast to linepack rising near — but not above — the maximum.
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