Swing trading for the last day of November saw prices rising bydouble-digit amounts at nearly every point Monday except in theRockies. The fact that post-holiday temperatures had grownconsiderably colder in the East were a partial factor in theincreases; however, sources said it were the avoidance of payingeven higher November cash-out prices to the pipelines that wasprimarily behind the incremental push higher.

Because prices have fallen such a long way below November indexlevels and cash-out numbers are based on prices throughout themonth, the cash-outs tend to be much higher than where the marketwas last week, a Midcontinent trader said. “Nobody wants to pay thecash-out for negative imbalances, so they’ll pay anything cheaperfor as much gas as they need,” he said.

By far, Monday’s biggest upticks on either side of 60 cents cameat Northeast citygates, where snowy weather was making it seem muchmore like winter than it had been before Thanksgiving. Otherwisethere was little consistency, although Gulf Coast points achievedlarger increases than those in the Midcontinent and Southwest.Meanwhile, quotes ranged from flat to slightly higher in theRockies and at Malin to about 15 cents up at the SouthernCalifornia border and PG&E citygate.

As evidence of the weather shift, Sonat issued an OFO Type 3 forparts of its market area (see TransportationNotes), saying demand was outstripping supply. Through last weeknearly all pipelines’ OFOs during November had been of thehigh-linepack variety; in fact, though it proved unnecessary to issueone, Sonat said last week an OFO Type 6 was a possibility for theholiday weekend due to excessive supplies.

Though many traders indicated they had completed most or allDecember business last week, there was still some bidweek activitystill remaining Monday, and price trends also diverged on ageographic basis—higher in the East and lower in the West. Onebuyer was paying in the mid $2.30s Monday for gas intoColumbia-Appalachia (TCO), about a dime above his purchases lastweek. A marketer said Chicago citygates started around $2.20 Mondayand rose to the upper $2.20s by that afternoon. He also reportedMichigan Consolidated citygates also in the high $2.20s, notingthey “were a lot flatter to Chicago than last week,” when Michiganwas trading about 5 cents below Chicago.

However, a western source said bidweek numbers had fallen. “Icould buy gas at $2.05-06 in the Permian and San Juan Basins[Monday], compared to about $2.13 last week,” he said.

One buyer was upset about having done December deals in themiddle of November. As a result his Michigan citygates are in themid $2.60s, more than 30 cents above current levels. “I thinkothers were like myself,” he said. “We saw Nymex dipping around 20cents or so in one day at mid-month and figured it was a good timeto lock in cash prices. We didn’t know then that the market wouldkeep getting a lot lower.”

A marketer reported a wide CNG basis range of plus 6.5-12, quitea ways under his TCO range of plus 13-14. It seems there was a goodamount of fear in the market that CNG was very long on supply, hesaid. “That fear manifested itself from November prices where CNGsometimes traded under Henry Hub,” he added.

A Northeastern utility sees little likelihood of a strongeraftermarket, at least initially. “If weather moderates like somemodels suggest, this thing has another 15 cents of downside,” hesaid.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.