The source who commented “It’s a wild and crazy market outthere” when asked Friday to explain big variations in price quotesfor Nov. 1-2 business was understating the situation by manydegrees. There seemed to be no rhyme or reason at all in the earlyNovember aftermarket when traders were reporting ranges of 25-30cents for individual points in swing deals done Friday.
There also didn’t appear to be much consistency in whereaftermarket prices stood in relation to bidweek levels, althoughmost sources agreed that early-November incremental prices werestarting out “in the dumps,” as one put it. The Appalachian pipeswere quoted only slightly under index, while Gulf Coast pointsranged from just a few cents lower to as much as 30 cents-pluslower in the case of Tennessee’s 800 Leg. And after seeing bidweeknumbers for intra-Alberta from the C$2.50s through the C$2.70s, amarketer was doing Sunday-Monday deals in the mid C$1.80s.
Columbia-Appalachia (TCO), which had run up a substantialpremium over Northeast citygates in the latter half of October,returned to a more normal position of 10-12 cents lower in somereports. But others said they were seeing TCO in the low$2.30s-slightly above index-for early November swing, placing itwell below the citygates.
Of course, it does tend to induce a little more schizophrenia ina weekend market when it’s separated into last-of-current-month andfirst-of-next-month segments, as one trader pointed out. Octoberfaded out with Halloween pricing that varied from drops of aboutC50 cents in Alberta and more than 10 cents at the PG&Ecitygate to rises of a dime or so at Northeast and Chicagocitygates.
The oddity of Michigan citygates outpacing deliveries in Chicagoby more than 30 cents at times last week after several months ofMichigan trading at a small discount to Chicago baffled officialsat the state’s two biggest distributors. “We’re choking in gas uphere,” said Bill Walter, vice president of gas supply andtransportation for Michigan Consolidated Gas. MichCon has had toturn away at least 100,000 dth/d of citygate deliveries onoccasion, he told Daily GPI Friday.
“I know the [price increase] phenomenon exists,” Walter said.But both he and Dan Bishop, spokesman for Consumers Energy,professed to not having a clue about the reason. Storage is 100%full at the two utilities, and they were restricting what could bedelivered from the production areas last week.
Those restrictions on new transport gas helped generate theMichigan premium, a marketer said. Those who could sell fromin-state storage were able to command the high-end prices frompeople that had to have the gas behind the citygate. “The marketingcompanies still have obligations to deliver there to customers, sothey have to buy from people who have storage and they have to payalmost any price that is asked,” he added.
And Chicago citygates were feeling the reverse effect from thesituation, another trader said. Chicago-area LDCs were teeming withgas dumped there that normally would have been targeted atMichigan.
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