If pipeline and LDC rates continue their upward climb, the”inevitable result” will be a sharp decline in producers’ wellheadrevenues and a subsequent “significant loss” of natural gassupplies, an official of a major producer group said Monday.
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Sources Expect Price Erosion Will Continue
Cash prices were dropping for the most part Wednesday as manyhad expected, and there’s no reason not to expect more softeningthrough the rest of the week, several sources said. They had plentyof evidence to back up their prediction: forecasts of moderatingheat in the South by the weekend, a falling futures screen and abearish AGA storage report exceeding 100 Bcf in injections.
FERC Shoots Down Two Midcoast Projects
Midcoast Interstate Transmission’s efforts to continue itsmonopoly control of the pipeline transportation market in northernAlabama fell by the wayside last week when FERC rejected its twocontroversial project proposals citing disinterest on the part ofshippers.
Cash Softness Expected to Continue for Weekend
Cash prices were coming down by as much as a dime or more insome cases Thursday, as was widely expected, and many sourcespredict more of the same for the holiday weekend. A moderatingweather trend in hot areas and coolness in the West, Midwest andNortheast certainly aren’t conducive to any market rally attempts,one trader said. And then there was the futures screen’sleadership, or lack thereof, a marketer said. Northeast market-areaprices were down 3-4 cents at first, then dropped another 3 centsafter seeing the screen’s example, he said. He was getting lateTransco Zone 6 (non-NYC) offers at $2.34 after having bought at$2.36-37.
Signs Point to Higher Gas Prices, Producer Says
Four factors will continue to tighten the future domestic gassupply picture, Randy Mundt, executive vice president of marketingfor producer Burlington Resources, said Tuesday at Ziff EnergyGroups’ New Gas Dynamics 2000+ conference in Houston. The twobiggest factors are producers’ difficulty in replacing productionand accelerated decline rates in the Gulf of Mexico. Also, Mundtsaid, Canadian imports are not an immediate threat to domesticproducers, and the current supply-demand scenario is roughly inbalance.
April Prices Continue to Soften for Weekend
Late-April prices maintained their weakening ways Friday,although most of the declines were not as steep as on “BlackThursday,” as one producer called it. The largest drops tended tobe concentrated at Western points, especially with Malin andPG&E citygates falling at double-digit rates again. Theirsoftness was exacerbated by PG&E’s Stage 2 OFO that becameeffective Saturday. The OFO, prompted by high system linepack,carried penalties of $5/dth for any deliveries exceeding 110% of acustomer’s nominated volumes.
Nymex Prices Continue Strong March Into Summer
The May Nymex contract surged 13.3 cents to $2.668 Wednesday,despite cash market prices which remained relatively unchanged. Thereason why? “Who really knows, but what I do know enough funds wereconvinced this market was a play to trigger buy stops above $2.61.Estimated volume of more than 80,000 contracts tells you that,” asource told GPI.
NIPSCO Offers Customers Fixed Prices
While some local gas utilities will continue struggling toinsulate their small customers from high gas prices and pricevolatility, NIPSCO announced yesterday it will begin offeringselect residential customers and all of its non-residential buyersan option of fixing or capping their commodity prices for up to oneyear starting in May. The program was approved last October as partof NIPSCO’s Alternative Regulatory Plan.
April Futures Looking To Expire Quietly
The April Nymex contract crept 3.5 cents higher to $2.365 onWednesday, as traders continue to hold the spot month to smalldaily changes ahead of the contract’s expiration this Friday. Aprilmanaged to reach $2.40 before intraday profit taking drove thecontract back, a source told GPI. Total estimated volume came in at70,152 contracts.
April Futures are Home in Their Range
The April NYMEX contract gained a meager 1.8 cents to $2.155 onMonday, as traders continue to hold the spot month to a tighttechnical trading range. The bottom of that range was confirmedwhen April bounced off major support at $2.105. Despite the narrowtrading band, estimated volume still managed to reach 33,502 totalcontracts.