Shrinking demand due to warmer weather throughout the countryconspired with a 6.1-cent drop on the Nymex futures contractThursday to put an end to a small and short-lived boost from arelatively bullish storage report. Friday’s cash prices retreatedan average of 3-4 cents in most areas, erasing the small gains fromThursday’s trading, and bringing cash back to the level it hoveredaround most of the week.
“Prices were down across the board in reaction to the Nymex dropand ahead of the typically low weekend load,” one trader said.Prices at areas such as the Houston Ship Channel, New York citygateand the PG&E citygate were down as much as 7 cents on the day.
Intra Alberta prices also came down with Friday’s reaction tothe Nymex slide, according to a Calgary-based marketer. “Lookingahead, the weather is going to be unbelievable this weekend inCalgary, with temperatures topping out at [about 70 degrees],” hesaid. “The guys are talking about playing golf, which is definitelynot the norm for March in Alberta.”
“The market is so dead right now that we’re starting to look atFeb-Oct. deals,” said another trader. “A lot of end users arelooking to lock-in the one-year strip just because everything is solow right now.” He added that looking forward, the most expensivemonth now is Jan of 2001 at 2.47 for Chicago citygate delivery. Forthe one-year, Jan 2000 is the most expensive at 2.37. “This meansthat for less than a year, your worst price is $2.37, which is verytempting for utilities.”
Taking a look at NGI’s Daily Gas Price Index quotes at this timelast year shows the Henry Hub, Chicago citygate and the southernCalifornia border were trading approximately 44 cents, 53 cents and58 cents higher than current levels, respectively.
“This makes the current cash price levels reasonable bycomparison, taking into consideration the size of the year-on yearstorage surplus,” one source said. Moreover, looking back atweather patterns at this time last year, “we find them to berelatively close to current patterns. The only difference in thiscase is that we started the last injection season with expectationsof a much colder winter and we ended up with a largely moderatewinter and too much gas in storage.”
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