Once again Friday traders who expected the cash market tosuccumb finally to the negative price pressures that have beenbuilding up were left wondering where its support is coming from.Even though the normal drop in demand associated with a weekendseemed real enough, sources said, quotes were flat to down just atouch in nearly all cases.
Transco Zone 6-NYC repeated as the day’s biggest declining pointwith a drop of nearly a dime, leaving it only a nickel over Zone 6’snon-NYC pool. A western trader considered it slightly amazing thatPermian and San Juan numbers fell only a penny or two, since not onlyhad El Paso ended its OFO, but Transwestern returned its West ofThoreau capacity to normal after finishing repairs to a Station 4compressor earlier than expected (see Transportation Notes).
Although no one claimed to know a definitive reason for pricesrefusing to drop in the face of fundamental weakness, a few tradersdid offer suggestions. Remember that there is more storageinjection flexibility now following several weeks of withdrawals, amarketer said. Then note that futures prices for the outer monthsrise steadily from February’s close at $2.173 Friday, he added.That kind of situation could offer a decent storage play fortraders with the right assets, the marketer said.
A Northeast source figures that cash may be waiting for thescreen to break one way or the other and is making no moves of itsown in the interim. And a third trader said the lack of marketsoftness amid weak influences might indicate that complacency aboutthe abundance of available supplies as winter weather remains mildis misplaced. “Even with all the gas in storage, supplies could betighter than people thought,” he said.
However, even with NOVA soliciting supplies to raise its targetlinepack (see Transportation Notes), a Calgary traderhad little reason to accept the above storage theory. “Linepack is attarget levels [currently],” he said. “Field receipts are a little onthe low end, but there are no requirements that would cause the marketto test them. Storage facilities are teeming with gas and people aregoing to have to start pulling pretty hard to get storage back down to50 Bcf by March 31.” He estimated that would require withdrawals ofabout 1 Bcf/d between now and then.
One more bearish influence was added to the market mix Friday:February crude oil futures tumbled more than half a dollar to$24.22/bbl. Crude has lost nearly $3 in value since trading near$27 last month.
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