A storage report considered bearish by most traders set thestage for softness in the cash market Thursday, then a plungingfutures screen virtually guaranteed cash declines. Sure enough,nearly every point fell between 5 and 8 cents. “We’re just tradingdown with the screen,” said a Western marketer.
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Bears roamed the gas trading woods in full force Thursday,sending cash prices down by a dime or much more at nearly allpoints. The biggest declines of about 35-45 cents occurred at thepreviously high-flying Transco Zone 6 and Texas Eastern M-3citygates in the Northeast. Although some Zone 6-New York Citydeals were still being quoted above $3, the average there fell intothe mid $2.80s.
The cash market has plenty of fundamentals to deal with goinginto the Christmas weekend. But despite widespread freezing weatherand a profusion of actual and/or potential pipeline OFOs (question:does a Strained Operating Condition mean CIG has a hernia?), priceswere unusually bearish Wednesday in light of what many wouldconsider bullish conditions. Most declines were in the neighborhoodof a dime, although some Western points that had been flying highearlier in the week were measuring their losses in terms ofdollars.
Geographic price tendencies shifted going into the weekend.Western markets, which had been resisting the week’s overallsoftness earlier due to heavy cooling load andsupply/transportation problems, were being routed Friday,particularly at the California border. Meanwhile Eastern pricesfell by a nickel or less in most cases, with Appalachian pipes andNortheast/Midwest citygates flat or close to it.
The anticipated big price drops for the Memorial Day weekendshowed up on schedule Friday everywhere except in Canada. Declinesof a dime or more were common at nearly all points. Only theAppalachian pipes and a few in Louisiana managed to hang on over $2in the producing areas. Chicago and Michigan citygates fell about15 cents into the mid to high $2.00s, and Northeast citygates weredown about a dime into the low to mid $2.20s.
PacifiCorp is throwing in the towel in its pursuit of Britain’sThe Energy Group (TEG) with the announcement it will not increaseits revised offer for the company. Energy Group Thursday recommended shareholders accept the 4.45 billion pounds ($7.4billion), 840 pence/share, cash offer made by Texas Utilities forthe company. “The Texas Utilities Offer represents excellent valuefor our shareholders and we recommend that they accept,” said DerekBonham, Energy Group chairman.
Cold weather helped many Western points avoid the prices dropsin the East that generally ranged from a nickel to 15 centsTuesday. It was snowing Monday and Tuesday in the Salt Lake Cityarea and that is expected to continue today, a trader told DailyGPI. Only the Southwest basins and Waha were left out of the West’sfirmness, likely because they were getting no demand support at allfrom intrastate Texas and Midwest markets, sources said.
Small decreases of 2-5 cents were the order of the day Tuesdayat most trading points, although a few managed to hang in there atflat levels. Moderating weather played some part, but the screen’sretreat late Monday along with another small drop Tuesday set thesofter mood, sources said.