Until a major sell-off came Friday, it appeared that priceswould realize fairly substantial week-to-week increases, thankslargely to double-digit gains that started the week off lastMonday. But Friday declines that constituted almost a mirror-imagereversal of Monday’s upticks left most points flat to just a fewcents above week-earlier levels. Northern California (Malin andPG&E citygate) showed the most strength, rising almost a dimeabove the previous Friday.
Northern California also was the major exception to Friday’sgeneral downturn with flat Malin and citygate quotes (the SouthernCalifornia border fell almost a dime despite hot weather expectedto last through the weekend). On the opposite side of the country,Northeast citygate drops of 15-20 cents or so showed the greatestweakness.
At a casual glance it would appear that “following the screen”did not apply to Friday’s cash market, since Nymex settled a nickelhigher. Not so, according to one source. Futures openedconsiderably lower and cash took that cue to go down also, he said.But then many points began rebounding when the screen made a strongrecovery, he added.
A marketer’s comment that “prices were all over the place”reflected an overall inconsistency in price movement trends. Mosttraders agreed with the lower early, higher later scenario. But atvarious points others reported up all the way, down all the way,or-in one case-higher/lower/higher. A western trader even said theSouthern California border was rising while San Juan Basin wasfalling. It’s not all that odd for them to move in oppositedirections though, he said, because SoCal Gas is not a dailybalancing pipe while El Paso is.
A good indicator of how soft the Northeast market was came in amarketer’s report of selling a Texas Eastern M-3 package at $2.60and then buying the same package back later at $2.55.
It was definitely a bearish sign for upcoming gas prices whenthe crude oil futures contract for November plunged by $1.55/bbl tounder $21. The contract had been approaching $25 little more than aweek earlier. The crude dive weakened gas sellers’ hopes that theycould get high winter prices without fearing that industrialcustomers and electric utilities might switch to fuel oil indual-fuel facilities.
A Northeast-oriented marketer applauded the downward pressure ongas from falling crude numbers. “I know producers will disagree,but gas prices need to get pounded down even more by lower crudefutures,” he said. “I welcome price volatility, because I can makemoney in a falling market as easily as in a rising one.”
The tropical outlook remained benign. Tropical Depression 12 wasa little over 900 miles east of the Lesser Antilles Fridayafternoon but was almost stationary and far from posing any threatto Gulf production.
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