“Dead” was the popular word used by traders to describe thestagnant cash market Thursday, where prices showed very little, ifany, change from the prior day. Most sources believe that shortcovering is the main factor helping cash maintain current pricelevels amid the lack of any meaningful fundamental support.
“The market is pretty much being held up” because most marketplayers didn’t buy much baseload gas at the beginning of the monthand they’re getting caught right now trying to cover theirpositions, said one marketer. “We’re getting close to the end ofthe withdrawal season, so storage deliverability is lower. These[shorts] can’t pull out of storage as hard, and they have to buy onthe spot market.” He expects the latter scenario to continuethrough the end of the month, keeping cash relatively stabledespite the lack of fundamental support. “We have no weather, andwe have huge storage inventories. This means the cash market has noreason to spike with the exception of support from these shorts.”
Another marketer, however, said the AGA storage report this weekprovided some help in preventing a price collapse, despite thelingering 355 Bcf storage surplus compared to the same time lastyear. The report showed the highest withdrawal for any week sinceJanuary and almost double the previous week, he noted.
Chicago prices started in the upper $1.70s, but after a pushtoward the $1.80 level, they turned back, according to oneChicago-based buyer. Late bids at the citygate were seen in the low$1.70s, he added. “Chicago prices could continue to lose ground forthe rest of the month, but there seems to be good buying supportwhen prices dip into the middle $1.60s.”
The Rockies market was largely flat for the conclusion of theday, according to an area trader. “In some cases, we paid higherprices [Wednesday] than we did [Thursday],” he added. The tradersaid that Questar declared an Operational Flow Order (OFO) due tohigh inventories on the system. “It is 65 degrees out here andthere’s too much gas that can’t find a home.”
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