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Prices Mildly Firmer in East, Rallying Strongly in West
Traders returned to a fairly quiet market Monday in which prices increased by about a dime or less at most eastern points but by considerably larger amounts in the West. California was heating up rapidly and registered triple-digit recoveries from weekend softness.
The frequent condition in which cash follows the screen was reversed Monday, said a Houston-based source. Futures began the morning in the red, he said, but was led to more than a dime higher by initially strong cash numbers, he said. However, a Nymex selloff ensued following the close of cash trading, sending the screen back into negative territory by the end of the day. The source was finding little gas load in the Northeast, but reported power generation demand was picking up in the South now that cooling rains from the remnants of Tropical Storm Allison had left the region behind.
A Midcontinent producer detected signs of price strength in the cash spread from the screen. Before Monday the Midcontinent pipes in general anywhere from 30 cents (weekdays] to 34 cents (weekends) back of the Nymex level, he said, but yesterday’s spreads tended to be in the range of 20-25 cents.
The producer and a marketer agreed that hotter weather drove most of the small gains in the Midwest/Midcontinent small gains, but the marketer sees little durability in the moderate strength. “Sure, it’s getting hotter now, but forecasts I’ve seen indicate that a front could be cooling off the Midcontinent again as early as Wednesday,” he said.
For the second week in a row, the border-SoCalGas relinquishment of its ranking as highest-priced trading point lasted for only a weekend. With a heat wave threatening to strain the state’s electricity grid again this week, border-SoCal quotes were surpassing $8 in some cases Monday. PG&E, which has issued several high-linepack OFOs recently, projected that its linepack would be hovering near minimum target levels this week. The California price strength made itself felt in the Rockies and Southwest basins also.
A producer reported that the Midcontinent market is looking weak for July. She has seen Panhandle Eastern deals being done for next month at index minus 3.75 cents, and reported physical basis of minus 14-13 cents for Panhandle Eastern and minus 16-15 for NGPL-Midcontinent.
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