Thursday’s trading was almost a repeat of Wednesday as cashquotes for both late August and September deteriorated again.Another big drop on the Nymex screen was too much for the physicalgas market to ignore, and sources continued to report that sellersgreatly outnumbered buyers. In some instances a buyer could almostname his or her September price, one trader said.
“This [September] isn’t just a shoulder month; it’s an armpitmonth as far as gas sellers are concerned,” commented a tradertrying to keep up with Thursday’s falling numbers. However, nowthat the futures decline has run its course, he thinks theSeptember cash market likely has bottomed out. A utility buyer feltthe market still had some downside left in it, but added, “I do notwant to get caught short in September.”
A buyer who got all of his September baseload at GPI’s SouthernCalifornia border index said the packages ranged from index flat tominus 2.5. Fixed-price border offers fell as low as $1.97 Thursday,he said. In a counteroffer, he told suppliers he would buy fromanyone willing to accept $1.92, but nobody was willing.
Late-month convergence wasn’t working very well, according to amarketer. He was doing Malin and Northwest-domestic deals forSeptember at prices consistently about a dime under Thursday’slevels for incremental August gas. Similarly, a buyer foundincremental Chicago citygates running about a dime above the$1.68-70 bid/ask range he was seeing for September. Chicago basiscontinued to shrink to plus 1-2 as the screen cratered, he said.
The PG&E citygate for September was trading around $2.13 infixed prices or at the Southern California border index plus 16, amarketer said.
Bidweek remained slow in developing Thursday, according to aGulf Coast trader. There’s not as much EFP activity as usualbecause some managers discourage it during hurricane season forfear of a futures spike, he added.
August activity predictably lightened up as traders turned moreof their attention to next month’s business. Much like onWednesday, incremental declines ranged from a nickel to a dime inmost cases, but the dime losses were notably more prevalentThursday. It was very hot in the Southwest, Midcontinent and GulfCoast production areas, but that was outweighed by relatively mildconditions in the major market areas.
The PG&E citygate, a rare point in not losing any priceground, got a bit of support from the utility’s issuance of a mildlow-linepack OFO for today (see Transportation Notes). A marketersaid the OFO was necessary because recent high August pricesrelative to September have enticed people to be short at thecitygate.
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