A run-up in citygate prices in the Northeast that had startedlate Wednesday afternoon was falling back rapidly by middayThursday, but not before some buyers had paid more than $3 intoTransco Zone 6-New York City. A trader reporting $3.00-$3.25 salesfor Zone 6-NYC said he had received a late offer of $2.65. TexasEastern M-3 numbers also were coming off hard, another source said.
The short-lived spike was prompted by a winter storm that wasapproaching the Northeast and was expected to last through theholiday weekend or longer. Cold temperatures also visited Southeastmarkets, limiting supplies for the Northeast, one marketer noted.In addition, a 200 MMcf/d limit on Transco IT into the New Yorkarea has been in place at the Linden Regulator Station in UnionCounty, NJ, since before Christmas. A Transco spokeswoman said thesituation is normal for this time of year.
The cold front gave a moderate boost to Gulf Coast andMidcontinent/Midwest prices in swing deals done Thursday for Jan.1-4. Weekend gas was trading as much as a dime above bidweeklevels, a Texas trader said. He observed a notable increase in “oddlot orders,” i.e., people buying for Saturday-Sunday only orSunday-Monday only.
Reflecting the regional shift of winter cold from West to East,the initial January aftermarket tended to be a bit softer for manyWestern points. One source’s Northwest swing deals on either sideof $1.70 were about a dime below the prices she had paid forJanuary baseload during bidweek.
A marketer could not understand why some people would pay over$3 for Northeast gas “when there’s so much storage available.”Another trader said deliverability was the key to that question. Iffor whatever reason storage could not be accessed in time, “it’sbetter to pay $3-plus for new gas rather than even bigger bucks inLDC penalties,” he added.
Sources continued to find the impact of Northern Border’sexpansion on the Chicago market an interesting topic. A marketernoted that the Chicago/Henry Hub basis differential is getting muchflatter than it used to be. An end-user in the Chicago area saidNorthern Border gas appeared to be keeping a lid on citygates. Tohim, the interesting thing was NB trading at a discount to NorthernNatural Gas because the supply was newly available on NB and had tofind a home. Lately there has been a big price advantage in buyingNNG into Peoples rather than NGPL into NI-Gas, he said, reportinggetting early January baseload bids of $1.89 via NGPL and $1.75 viaNNG.
The situation was simple as far as a Midcontinent-based marketerwas concerned. What’s limiting Northern Border expansion flows is”way too much gas in Chicago,” not water or pressure problems (seeDaily GPI, Dec. 29), he said. The excess of supply has crushed theChicago market to the point that on some recent days NNG-Venturahas traded above Chicago as people look elsewhere beyond the cityto sell their gas, the marketer said.
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