Bears continued to roam the gas price woods Tuesday in nearly all markets. Overly warm and power-short California was the major exception where prices for deliveries at the PG&E Citygate and at the Southern Border into PG&E were up sharply.

The screen made a mild rebound from Monday’s plunge of about a quarter, but that meant little to the cash market, a source said. Instead, traders focused more on the likelihood that overall weak fundamentals show little inclination of going away, he said. In addition, many kept their trading activity quiet as they anticipate another large injection volume in this afternoon’s AGA storage report.

Henry Hub cash was staying about 4-5 cents behind Nymex during the morning, a Texas marketer said, and swing swaps were 5-6 cents back of the screen. “That indicates rest-of-month prices are cheaper than next-day ones,” he said.

The marketer went on to observe that at this point the power demand outlook is not supportive of higher gas prices. A sizeable series of nuclear units is coming back online from maintenance and/or refueling outages, he said, “and that’ll take care of your peak demand for a while longer.” About two weeks of sustained heat will be needed to turn the market around, and that’s unlikely until least late May, the marketer said. However, gas is getting close to burnertip parity with fuel oil again, which might prompt some fuel-switching back to gas in the next few weeks, he said, noting that “all the dual-fuels [generating units] have been on oil now for the longest stretches in their history” because of the unprecedented strength of gas prices over the last year.

Midcontinent numbers were generally softer during morning trading but tended to sink even lower as deadline approached, a regional trader said.

The California Independent System Operator went to rolling blackouts late Monday afternoon but although it was up to a Stage Two Electrical Emergency Tuesday afternoon, it appeared that more blackouts might remain unnecessary. Nevertheless, Golden State power prices remained super-high, a gas trader said, and the resultant demand had PG&E citygates soaring by more than a dollar.

But reflecting yet another massive disconnect from the PG&E citygate, Malin prices “went into the sewer,” as one marketer characterized it. A lot of people must be long at Malin, where prices currently are related much more closely to Stanfield than to the citygate, he said. Apparently citygate traders are choosing to move more gas up the Baja Path from Topock at the Southern California border, the marketer added.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.