Any traders who decided that since April proved to be a goodmonth for long supply positions, they should continue the strategyfor May may be regretting that decision now. Though there is stillample time for price recovery-and at least one major aggregatorremains very bullish about the May swing market-the earlyaftermarket was headed south to the tune of about a dime or morebelow indexes in weekend deals done Friday.
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The Genesis Project, a deep-water oil and natural gas platform, has gone into production in 2,600 feet of water in the Gulf ofMexico. The drilling and production platform, operated by Chevron,is expected to produce approximately 30,000 barrels of oil and morethan 20 MMcf/d during 1999. Production is planned to increase at asteady pace so that in 2000 Genesis will reach its peak productioncapacity of 55,000 barrels of oil and 72 MMcf/d.
The alliance of Public Service Co. of Colorado (PSCo) andColorado Interstate Gas (CIG) have launched the operation of their53-mile, $25 million Front Range Pipeline stretching from theWyoming border south to Platteville, CO, and effectively haltingdevelopment of a competing 109-mile Front Runner Pipeline, proposedby Denver-based KN Energy.
The initial September aftermarket was both above and belowbidweek levels at various Eastern points Monday but decidedlystronger to the West. One trader found Southern California bordernumbers mostly in the mid $2.10s, nearly a dime above bidweekaverages. The situation was similar for Malin and the PG&Ecitygate, which got a little extra boost from a low-inventoryPG&E OFO (see Transportation Notes). “It’s hot here inCalifornia,” said a source, adding it seemed “like everybody wasout buying today.”
Traders who hadn’t finished already wound up their July bidweekbusiness Tuesday and started looking for clues on aftermarketdirection. What they found in swing deals done for today only was amixed bag of flat to up or down slightly from bidweek levels. Butmany sources are expecting an overall strong aftermarket. There maybe some initial softness since the July Fourth holiday weekend isconsidered the lowest demand period of the year. But sources lookfor fundamental cooling load to support gas prices after that.
May baseload prices were tanking on the last morning of tradingThursday, and May swing numbers for either the 1st only or 1st-4thwere “really pathetic,” as a Midcontinent marketer so delicatelyput it. The plunging June futures screen was an obvious drag oncash trading. The early weakness of the May aftermarket confoundedmany who in late April had been expecting incremental prices torise above bidweek levels.
The May Nymex contract nudged 2.1 cents lower to $2.535 Mondayamid a session marked by a relatively light total estimated volumefigure of just over 30,000 contracts. “Many traders are waiting fordirection from the cash market, and since that hardly moved today,it makes sense futures hardly budged either,” an analyst told GPI.