After beginning the post-Thanksgiving week with two days ofsoftness, the cash market got back on a firming track Wednesday intrading for the last day of November. The upticks were fairlymoderate overall, ranging from slightly down at a few scatteredpoints to Northeast gains in the teens.
But the buying spree continued in California and the PacificNorthwest, where increases were in triple digits. The region toppedout with a quote of $18.50 at the Southern California border. “It’sgotten to where suppliers are like sharks who have smelled blood inthe price waters and have whipped themselves into a feedingfrenzy,” according to one observer.
A large aggregator took a more conventional view of the continuingstrength of California prices. Kern River’s Fillmore CompressorStation is down, reducing IT to zero today (see Daily GPI, Nov. 16), and he estimated that’s takingabout 70 MMcf/d out at the border. Transwestern still has about 50MMcf/d of West of Thoreau capacity curtailed through today due to anextension of compressor outages (see Daily GPI, Nov. 21), he noted. But most important arebalancing concerns in the last day of SoCal Gas’ final five-daybalancing period for November, he said.
Once again some cash traders had trouble understanding the Nymexpsychology when it comes to greeting weekly storage reports. AGAsaid 146 Bcf was withdrawn last week. Sources had expected a bignumber because of the harshness of last week’s weather, but 146handily surpassed virtually all prior expectations. Yet after aninitial push higher the screen later tumbled to finish theafternoon nearly 3 cents lower.
To one source, the market is looking for “realities in severelycold weather” and not seeing much of it. The Canadian [forecasting]Model is saying much colder in the near term, but three othermodels don’t agree, he said.
The National Weather Service is giving mixed comfort to bothbulls and bears with its latest six- to 10-day forecast. Itpredicts below normal temperatures next week in the key market areaof the Northeast and in most of inland California and Nevada.However, it projects above normal readings in the middle third ofthe U.S. and normal ones elsewhere.
Several sources reported December prices rising as bidweek drewnear a close. One trader wanted to kick himself over waiting tomake Chicago citygate purchases Wednesday. Prices that earlier hadbeen in the $6.10s had risen into the mid $6.30s. However, anend-user said he had passed on a Chicago offer at $6.38 Wednesdaybecause he hopes the late screen collapse would have a negativeeffect on last-day December numbers today. Also, Alliance is thewild card in the Chicago market as traders wait to see if it beginsofficial operations Friday or not, he said.
California numbers were still rising as a big marketer reporteda border sale for $15.20 at midafternoon. Perhaps more importantlywas the continued escalation of index premiums. One buyer in thestate reported paying the GPI SoCal border index plus a dollar forone package. There was little choice about it, she said. “We had togo that high to make sure the gas gets delivered.”
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