Technical factors exert their influence on the natural gasmarket on a daily basis, confounding some traders while rewardingothers. Sometimes technicals are in agreement with underlyingfundamentals as was the case throughout the month of September,when supply tightness met with chart patterns and trend lines thatwere flashing buy signals. The end result: a rally that lifted theOctober contract 40 cents for the month. But, oftentimes thesefactors are not in concert, and trading thus far in October hasbeen just that. Whereas storm-related supply shut-ins supported themarket in September, October has been relatively free of supplydisruptions. That, coupled with U.S. storage inventories nearlyfull, has created an oversupply situation which has weighed onprices most of the month.
Daily
Articles from Daily
Observers See Long, Arduous Transition to Capacity Auction
A daily auction process to allocate pipeline transportationcapacity in the secondary market is the “linchpin” to removingprice caps for short-term transportation, FERC Commissioner LindaBreathitt said yesterday at the seventh annual DOE-NARUC NaturalGas Conference in Pittsburgh, PA. “Without market power mitigation,I am unwilling to release the price cap.”
Transportation Note
Pacific Gas & Electric extended a low-inventory Stage 1 OFO(see Daily GPI, Sept. 1) through today. Penalties were unchanged,but the negative imbalance tolerance was tightened to 5%.
Mild Firming Expected to Reverse; Alberta Plunges
As a Daily GPI source had predicted Monday, that day’s futuresrun-up provided enough momentum to keep most cash market points onthe rise Tuesday. But don’t bet the farm on cash firmness tocontinue today, not after the screen’s headlong plunge Tuesday,several traders said. Despite heat waves remaining in the West andSouth, there is not enough in the way of fundamentals to counterthe screen’s negative influence, they said.
August Futures Expire Mostly Flat Amid Flurry of Activity
A casual glance at the futures table — its narrow trading rangeand its small daily change — would lead one to believe Wednesdaywas a relatively quiet expiration day at Nymex, during which theAugust contract was ushered off the board at $1.942. ButWednesday’s trading was anything but ordinary. Traders wereinundated by a host of technical and fundamental factors, leadingto “very choppy” trading and heavy volume of 116,428.
Most Points Post Big Gains Based on Early Screen
The bullish sentiment for the aftermarket that several tradershad expressed Tuesday (see Daily GPI, July 1) appeared to bejustified Wednesday as price increases of a dime or more dominatedmost points. The old refrain of “following the screen” was popularagain. But as the screen leads up, so shall it also lead back down,according to some prophecies, and so it was Wednesday. Early pricelevels were retreating late as Henry Hub futures gave up earlygains. Henry Hub cash started at $2.48-49 but fell as low as $2.40late, a marketer said.
Transportation Note
PG&E Gas Transmission-Northwest reported Tuesday it hadcompleted unscheduled maintenance on Unit C at Station 7 (see DailyGPI, June 24-26). Throughput capabilities returned to 2,500 MMcf/dat Kingsgate, 2,375 MMcf/d at Station 8 and 1,900 MMcf/d at Station14.
Transportattion Notes
Pacific Gas & Electric extended a Stage 1 Operational FlowOrder that began Thursday (see Daily GPI, June 11) through today.
Correction:
The following is a clarification of a story titled “NGC’sCapacity Posting,” which ran in Daily GPI, April 22: Thecalculations and conclusions described in the story were totallythose of Michael J. Harris of the Reed Consulting Group ascontained in a FERC filing made by the producers protesting the NGCcapacity contracts on El Paso. The Prebon Energy brokerage housemade no predictions. A footnote to the filing says Prebon, whichhas offices in Jersey City, NJ, and Houston, supplied futurequotes at a specific time – 11:30 a.m. on March 30 – of the SanJuan Basin-California border basis differential. The quoted remarksregarding the expected San Juan-SoCal basis differential for thefuture and the attractiveness of the NGC capacity to other shipperswere those of Harris and the Reed Consulting group. Further Prebonsays it did not give basis information to Mr. Harris or the ReedConsulting Group but that the basis information attributed toPrebon was supplied by one of the parties to the filing. NGIregrets the error.
Correction:
A story titled “NGC Releases First Batchof El Paso Capacity” in the Tuesday April 7 edition of NGI’s DailyGas Price Index mentioned only one of two El Paso capacity packagesbeing released by NGC Corp. NGC is releasing the 593,122 MMBtu/d firmcapacity package through the end of April, but also is releasing thesame quantity with the same delivery and receipt points for a muchlonger term: May 1 through December 31, 1999, which is the end of thecontract term for NGC.
