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Prices Still Rising as Cold Spreads, But Uptick Pace Slows
Prices were still moving higher in most cases Tuesday, but generally at a slower pace than on the day before. Markets as disparate as citygates in Florida and the Northeast, San Juan Basin and the Pacific Northwest/Western Canada were still seeing double-digit gains of up to about a quarter, with Algonquin citygates averaging a little more than $5. But a majority of points ranged from flat to up about a dime, with gains of a nickel or less prevalent.
Perceptions of how much staying power remains in this week’s bull market depended on the region. In the East, where wintry conditions were getting worse and spreading southward, sources tended to think mild firmness will continue Wednesday. But a couple of western traders said at least some points there are likely to be falling. They noted a late retreat in Rockies numbers Tuesday and a couple of upcoming days of slightly milder weather on the West Coast before the trend turns colder again.
But one marketer begged to differ about the potential for western softening, saying, “It makes sense that cash would stay strong. It is snowing in Denver right now. The view out my window is completely whited out. It gives us an early winter feel. Weather is a big deal for us in the Rockies.”
A Northeast utility buyer somewhat agreed with the Denver marketer, commenting, “We’re getting December-like weather here.” As best the buyer could tell, utilities and end-users in the Northeast still prefer to buy new supplies, even at higher prices, rather than dip into their storage accounts prematurely. They can remember getting burned two years ago by using storage early and then seeing prices soar during the winter of 2000-01, she said.
Florida citygates were up about 15 cents into the low $4.60s after Florida Gas Transmission tightened the imbalance tolerance on an Overage Alert Day notice from 20% to 10%. A little more than 100 MMcf/d was offline in FGT’s Zone 1 due to operational problems causing a shut-in of the pipe’s interconnect with MOPS (see Transportation Notes).
A marketer said Rockies quotes tried to keep running higher, but then came back down in later deals. He thought “somebody was trying to muscle prices higher by holding gas off the market,” giving up daily profits now for the prospect of greater revenues later this winter. Western power prices were still strong, he noted, and helped boost gas numbers.
Another trader noted that nuclear outages are contributing to price strength in the West, citing downtime of a Diablo Canyon unit as a major factor. Also, she said, a lot of Alberta gas was going east to satisfy demand in eastern Canada and the U.S. Midwest and Northeast. The cutback in supply that normally would have gone into the Pacific Northwest and California kept prices firm in those areas and created extra demand for San Juan gas, she said.
November prices were starting to come off slightly in sympathy with the screen’s expiration-day loss of a nickel, a western marketer said. He quoted SoCal border prices throughout the $4.00s. People were bidding PG&E-Topock at index minus 5 cents, he added, but he refused to sell that low.
A New England source reported an Algonquin citygate package for November at the Nymex settlement ($4.126) plus basis of 54 cents. The source otherwise planned to go with daily swing next month, being afraid that pipelines might restrict secondary delivery points for baseload.
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