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Cash Stubbornly Refuses to Follow Screen Down
For a change the cash market demonstrated some independence fromthe futures screen influence Wednesday. Even as futures followedTuesday’s downtick of nearly 6 cents with an even bigger diveyesterday, quotes at nearly all non-Western points either held flator managed to tack on up to 3-4 cents. This ran contrary to what anumber of traders had expected.
The softening that did occur was concentrated in the Rockies,Southwest and California border. The weakness at Malin, which fellmore than a nickel to the mid $1.90s, was exacerbated by a PacificGas & Electric high-linepack advisory for Friday, though theutility did not issue an OFO. The advisory, along with weatherforecasts calling for below-normal temperatures in the Golden Statenext week, was pushing California prices down for both August andSeptember, a marketer said.
One source thinks the relative firmness at Eastern pointsWednesday was only a temporary aberration. The AGA’s afternoonreport of 76 Bcf in storage injections last week was above thefour-year average, he said, and should be bearish enough to haveall cash markets falling today. It’s hard to understand how thefigure could be so high, he said, “but somehow they keep poundingit [storage] into the ground.”
Sources reported this basis talk for September: Chicago plus5-5.5; MichCon plus 1.5-2, Panhandle Eastern minus 9.75-10.25;NorAm-east minus 6-7; ONG minus 8; and Southern California borderplus 26. If it holds up, the MichCon quote would mark a return topositive basis there following slightly negative basis in the lastbidweek.
A marketer said he’s hearing PG&E citygate numbers of$2.71-72 for the November-March strip. At those levels, he said, hewould advise citygate buyers to index purchases rather than lock ina price that high. The marketer added there is a “fire sale” goingon for GPI’s Southern California border index in Septemberbusiness. Suppliers had been getting a premium of 0.5-1.5 centsover the index recently, but now deals are being bid flat to index,reflecting the cool weather due in California as bidweekapproaches, he said.
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