A double-digit drop Tuesday on the futures screen had nearly allsources anticipating softer cash prices Wednesday. They were right,at least in Eastern markets where most points fell by amounts oneither side of a nickel. But markets in the West were surprisinglyfirm. With the exception of Permian Basin and Waha gas in theSouthwest, which joined the East in fallbacks of about a nickel,the West was essentially flat to a few cents higher.
Cool weather in the Rockies may have contributed a bit ofheating load, one trader said, but he thinks the relative strengthderived more from supply tightness in the region. Despite continuedwarnings of high linepack by Northwest Pipeline, Stanfield producedthe day’s biggest gain of about a nickel. Stanfield began with abid-ask range of $1.48-52 “and then really took off,” a source inthe region said.
PG&E citygates achieved a small uptick despite the utilityissuing a mild OFO for today (see Transportation Notes). And atrader at the Southern California border, which also rose about 2cents, said the $2 area “is still a good value at the border.” Hedoesn’t foresee prices going much below that if at all.
Those who believe strongly in the “following the screen” conceptfor cash price expectations got mixed signals Wednesday. The hugerise of almost 19 cents in the regular Nymex trading session wastempered by a retreat of about 6 cents in Access activity, a GulfCoast marketer said. He and other sources look for no more thanmodest upticks at most in today’s cash market. The screen riseWednesday seemed to be truly a technical rally, the marketer said,since storage “is chock-full at about 58%” for this stage of theinjection season. However, he doesn’t expect Gulf Coast prices toget below the $1.80s at any time in the rest of the year.
Even prior to the Access fallback, a Northeast trader wasn’texpecting much resurgence in cash despite the huge run-up inregular futures trading. He just didn’t see how the market couldsupport July futures at $2.17. “So you’re hot in Houston?” hescoffed. “Big deal. You’re about the only region that’s hot. Uphere in the Northeast [high] temperatures have been in the 70s forquite a while.”
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